Extra Payment Mortgage Calculator
Find out how many years earlier you can pay off your mortgage and how much interest you save by adding a fixed extra amount to each monthly payment. Perfect for homeowners with discretionary income who want to build equity faster.
About this calculator
Every mortgage payment first covers the month's interest on the remaining balance; anything left reduces principal. When you add an extra amount on top of your required payment, the entire extra sum attacks principal directly. A smaller principal generates less interest the next month, so more of next month's required payment also goes to principal — the effect compounds. The calculator first computes the standard monthly payment M using M = P × (r × (1+r)^n) / ((1+r)^n − 1), then simulates month-by-month payoff using the combined payment (M + extra). Each month: new balance = old balance × (1 + r) − (M + extra). The loop runs until the balance reaches zero, revealing the new payoff timeline and total interest saved compared to the original schedule.
How to use
Take a $250,000 loan at 5% for 30 years. Monthly rate r = 0.05/12 = 0.004167, n = 360. Standard payment M = 250,000 × (0.004167 × (1.004167)^360) / ((1.004167)^360 − 1) ≈ $1,342. Add $200 extra per month: total payment = $1,542. Running the month-by-month simulation, the balance hits zero after approximately 291 months — about 24.25 years instead of 30. That is nearly 6 years early and saves roughly $34,000 in interest over the life of the loan.
Frequently asked questions
How much interest can I save by making extra mortgage payments each month?
The savings depend on your loan balance, interest rate, and how much extra you pay. On a $250,000 mortgage at 5% for 30 years, adding just $200 per month can save over $34,000 in interest and cut nearly 6 years off the loan. Higher interest rates amplify the savings because every dollar of early principal reduction eliminates more future interest. Even small amounts like $50 or $100 per month add up significantly over a 30-year horizon due to the compounding nature of interest.
Is it better to make extra mortgage payments or invest the money instead?
The answer depends on your mortgage interest rate compared to your expected investment return after tax. If your mortgage rate is 7% and you expect stock-market returns of 8–10%, investing the extra money may yield more over the long run. However, paying down the mortgage is a guaranteed, risk-free return equal to your interest rate, while investment returns fluctuate. Most financial advisors suggest also considering the psychological value of being debt-free and ensuring you have an emergency fund before making extra payments.
Does making extra mortgage payments every month reduce the principal immediately?
Yes — any amount you pay beyond the scheduled payment is applied directly to the outstanding principal, as long as you specify that on your payment. Reducing the principal immediately lowers the interest charge for the following month, which in turn causes more of your regular payment to go toward principal the next cycle. This compounding effect is why even modest extra payments have a disproportionately large impact over the decades of a mortgage. Always confirm with your lender that extra payments are applied to principal and not held as a future payment credit.