Extra Mortgage Payment Calculator

Extra payments are unusually powerful because of where they land. A required payment is split between interest and principal, and early in a loan most of it is interest. An extra payment is different: every unit of it goes straight to principal, and it permanently removes all the future interest that would have accrued on that amount for the rest of the term. That is why a modest extra amount can cut years off a long loan without changing the interest rate at all.

The same logic explains why timing matters so much. An extra payment made in the first year avoids interest for the entire remaining term; the same amount paid in the final year avoids almost none. This calculator applies a lump sum immediately for exactly that reason — asking when to apply it would add a field whose answer is always "as early as you can." If you're deciding between saving up for a larger lump sum later or paying smaller amounts starting now, the smaller amounts starting now usually win.

The chart shows both balance curves at once: what you'd owe on the original schedule, and what you'd owe with your extra payments. The gap between them is the debt you've erased ahead of schedule, and it widens over time because each extra payment also reduces the interest charged in every month that follows. The vertical marker is the month your loan actually ends. The table gives the same information as exact numbers year by year, including how much interest you've saved by the end of each one.

One thing that surprises many borrowers: paying extra normally does not lower your required monthly payment. On a standard amortizing loan the payment is fixed for the term, so extra payments shorten the term instead. Some lenders offer a recast, where they recalculate a lower payment against your reduced balance — that keeps the original end date but frees up monthly cash flow. Recasting and prepaying are opposite choices with opposite benefits, and this calculator models prepaying. If you want a lower payment rather than an earlier finish, ask your lender specifically about a recast.

Before you prepay, check whether your loan has a prepayment penalty. The Consumer Financial Protection Bureau explains that these are fees some lenders charge for paying off all or part of a mortgage early, that they typically apply when the whole balance is repaid within the first three or five years, and that not all mortgages have one. Importantly, the CFPB also notes that prepayment penalties do not normally apply when you pay extra principal in small amounts at a time — which is exactly the pattern this calculator models. Confirm the specifics with your own lender before making a large one-time payment.

Prepaying is not automatically the best use of spare money. The return on paying down a loan is effectively equal to its interest rate, guaranteed and risk-free. That makes it an easy win against high-rate debt, and a genuine trade-off against a low-rate mortgage when other uses of the money might earn more. Three things usually come first regardless: an emergency fund, any higher-rate debt such as credit cards, and any employer match on a retirement contribution, which is an immediate return no loan rate can match. After those, comparing your loan rate against what the money would otherwise earn is the right question.

This calculator assumes a fixed interest rate, a standard equal-payment amortizing schedule, and that your extra monthly amount is paid every month from the first one. It does not include prepayment penalties, servicing fees, escrowed property taxes and insurance, or the effect of any tax deduction for mortgage interest, since those vary by lender and by country. Results are an estimate for planning; confirm your exact payoff figure with your servicer, and make sure extra amounts are actually applied to principal rather than held as a prepaid future installment.