Mortgage Extra Payment Calculator
Making extra principal payments on your mortgage is one of the most effective ways to build equity faster and reduce the total interest you pay over the life of the loan. This calculator computes your standard monthly payment, then models what happens when you add a fixed extra amount to principal each month. It shows the reduction in total interest paid, the number of months saved, and the new payoff date compared to the original schedule.
Extra payment formula
Standard: M = P * r(1+r)^n / ((1+r)^n - 1)
Extra path: each month pay M + Extra toward balance
Interest Saved = Total Interest (standard) - Total Interest (extra)
The extra-payment simulation runs month by month: interest accrues on the outstanding balance at the monthly rate, then the full payment (M + Extra) is applied. The loop runs until the balance reaches zero, counting months and cumulative interest.
Tips for making extra payments
- Instruct your servicer in writing to apply extra payments to principal, not future payments.
- Even small extra amounts (an extra $100 per month) save significant interest on large balances over long terms.
- Biweekly payments (half the monthly payment every two weeks) create the equivalent of one extra full payment per year.
- Check whether your loan has a prepayment penalty before making large extra payments.
- Extra payments permanently lower your balance and interest, but do not reduce your required monthly payment unless you recast the loan.
Extra mortgage payments: frequently asked questions
How do extra mortgage payments reduce interest?
When you pay extra principal, the outstanding balance drops faster. Since interest is calculated on the remaining balance each month, a lower balance means less interest charged. Every dollar of extra principal eliminates interest on that dollar for every future month of the loan.
Should I make extra payments or invest the money?
Paying down a 7% mortgage is equivalent to earning 7% guaranteed and after-tax on investment. Whether investing beats that depends on your expected after-tax investment return and risk tolerance. Extra payments are risk-free; market returns are not.
Do lenders apply extra payments to principal automatically?
Most lenders do, but some older loans may apply it to future payments first. Check your loan agreement or contact your servicer. Specify 'apply to principal' when making extra payments to ensure they reduce your balance immediately.
What is the effect of paying one extra payment per year?
One extra annual payment is equivalent to paying one-twelfth extra each month (a common biweekly payment strategy). Over a 30-year mortgage this typically cuts about 4 to 5 years off the term and saves tens of thousands in interest.
Can I use this calculator for a lump-sum prepayment?
This calculator models a fixed extra amount added to each monthly payment. For a one-time lump-sum prepayment analysis, the same principle applies: the lump sum reduces the balance on the day it is applied and lowers all future interest charges.
Official sources
- Consumer Financial Protection Bureau: What is a prepayment penalty?
- HUD: Buying a Home.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.