Extra Mortgage Payment Calculator

How it works

An extra payment works because every dollar above the scheduled amount goes straight to principal. That immediately shrinks the balance interest is charged on, so it removes not just this month's interest but all the future interest that principal would have generated. The scheduled payment is set by the standard formula, and anything on top of it is pure principal:

With the defaults above, a $320,000 loan at 7% has a $2,129 scheduled payment. Adding $200 a month pays it off in 279 payments instead of 360, so you finish 81 months, about 6.8 years, sooner and save roughly $118,972 in interest. The extra $200 does far more than $200 a month of work, because it compounds against the rate for the rest of the loan.

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A worked example: $200 extra on a $320,000 loan

Picture a fresh 30 year mortgage of $320,000 at 7%, and you decide to round up your payment by $200 every month. That small add-on reshapes the whole loan: it clears in 279 payments instead of the scheduled 360.

That is 81 months off the tail end of the loan, about 6.8 years. Because those late payments are the ones stacked with interest, cutting them saves you $118,972 over the life of the mortgage.

The extra money works because every dollar above the required payment goes straight at the principal, so interest has less to compound on. Try your own balance, rate, and extra amount to see how many years you could shave off.

Making extra payments count

• Start early. Extra principal is most powerful in the first years, when the balance and interest charge are largest. The same extra dollar late in the loan saves far less.
• Make sure it hits principal. Tell your servicer to apply extra to principal, not to prepay next month's bill, or the interest savings will not show up.
• Keep it sustainable. A steady, affordable extra you never skip beats an ambitious amount you abandon. Even rounding the payment up helps.

Extra payments versus a shorter term

Paying extra on a 30-year loan and simply taking a 15-year loan both get you to payoff faster, but they are not the same commitment. Extra payments are voluntary: you speed things up when you can and fall back on the lower required payment when money is tight. A shorter term locks in a higher payment for the life of the loan, usually in exchange for a lower rate.

• Flexibility. Voluntary extra payments keep your required payment low, which is a real safety net if income dips or an emergency hits.
• Rate. A true 15-year loan often carries a lower rate than a 30-year, so paying a 30-year like a 15-year saves a little less than the genuine short term.
• Discipline. The shorter term forces the faster payoff, while extra payments rely on you actually making them month after month.
• You can combine both. Take the 30-year for its low required payment, then voluntarily pay it like a 15-year, keeping the option to ease off.

Why the savings dwarf what you put in

It can look too good that a small monthly extra saves many times its total in interest, but the mechanism is straightforward. Every extra dollar is principal removed early, and removing principal early cancels all the interest that dollar would have generated across the remaining years. The result is that the total interest saved often runs to several times the extra you actually paid in.

• Interest is charged repeatedly. A dollar left in the balance is charged interest every month for years, so removing it once avoids a long stream of charges.
• Rate sets the multiplier. At higher rates each avoided year of interest is worth more, so extra payments pay off harder when rates are high.
• Timing sets the reach. Extra principal in year one avoids interest across the whole remaining term, while the same dollar late in the loan has little time left to save.

Recasting after a big extra payment

If you make a large one-time payment toward principal, you have a second option beyond simply finishing early: a recast. Recasting keeps your rate and remaining term but re-amortizes the loan around the new, lower balance, which lowers the required monthly payment. It is a quieter cousin of refinancing, and it does not require re-qualifying.

• Lower payment, same payoff date. Unlike ordinary extra payments, a recast reduces the monthly amount rather than shortening the loan.
• Small fee, no re-approval. Lenders usually charge a modest flat fee and require a minimum lump sum, but there is no appraisal or credit check like a refinance.
• Not always offered. Government-backed loans often cannot be recast, so confirm your loan is eligible before counting on it.
• Keep paying extra if you prefer. If your goal is the earliest possible payoff, skip the recast and let the extra keep shortening the term.