How to use this calculator
- Enter what you still owe, your rate and the years left. All three are on your mortgage statement.
- Enter an extra monthly amount, a one-time lump sum, or both. The results show the interest you save and your new payoff date.
Why extra payments save so much
Interest is charged on the balance you still owe. Every extra dollar of principal you pay today is a dollar that never collects interest again, for every remaining month of the loan. That is why an extra payment early in a loan saves far more than the same payment near the end.
Monthly extra or a lump sum?
A lump sum paid now saves more interest than the same total spread over years, because it shrinks the balance sooner. A steady monthly amount is easier to keep up and adds up over time. Many people do both: a small monthly extra plus part of a bonus or tax refund.
Before you pay extra
- Tell your lender to apply it to principal. Otherwise some servicers hold it toward next month’s payment.
- Check for a prepayment penalty. Most home loans in the US don’t have one, but your loan documents will say.
- Pay off high-interest debt first. A credit card at 22% costs far more than a mortgage at 6%.
- Keep an emergency fund. Money paid into your home is hard to get back out quickly.
- Compare with investing. Paying extra gives a guaranteed return equal to your mortgage rate. Investing may earn more over time, but with risk.
Frequently asked questions
Does paying extra lower my monthly payment?
Usually not. Your required payment stays the same, but the loan ends sooner. Some lenders offer a “recast,” which lowers the payment after a large lump sum, often for a small fee.
Is one extra payment a year worth it?
Yes. One extra full payment a year, about 1/12 extra each month, typically takes several years off a 30-year loan. Enter your payment ÷ 12 as the monthly extra to see the effect on your loan.
What about biweekly payments?
Paying half your payment every two weeks adds up to 13 full payments a year instead of 12. That has the same effect as paying 1/12 extra each month.