Extra Payment Calculator
See what paying extra actually does to your mortgage. Compare the same loan with no extra payment, $200 a month, and $500 a month, with full amortization schedules, payoff dates, and the total interest avoided in each case.
How to Use This Extra Payment Calculator
Three copies of a $375,000 loan at 6.75% over 30 years are preloaded below. They are identical in every respect except the extra amount paid toward principal each month, which isolates exactly what the extra payment is doing.
What to look at:
- 1.Payoff date - how many years each extra payment removes from the term
- 2.Total interest - compare against the baseline to see the money avoided, then against what you actually paid in extra
- 3.$200 vs $500 - the return does not double when the payment does, and seeing where it flattens tells you where your own sweet spot is
- 4.Switch to "Edit Individual Scenario" to enter your own balance, rate, and extra amount, including a start date if you plan to begin later
Three versions of the same loan
Identical $375,000 loan at 6.75% over 30 years, differing only in the extra amount paid toward principal each month. Compare the payoff date and total interest across all three.
Tip: Switch to "Edit Individual Scenario" to set your own loan amount, rate, and extra payment. The comparison updates as you go.
Why Extra Payments Work So Hard
Every extra dollar skips all its future interest
A normal payment is split between interest and principal, and early in a loan most of it is interest. An extra payment is different: it goes entirely to principal. That permanently reduces the balance every subsequent month's interest is calculated on, so a single extra payment keeps paying you back for the remaining life of the loan.
Timing matters more than amount
The same total sum produces very different results depending on when it lands. Paid in year one it avoids interest on nearly 360 remaining months. Paid in year twenty it avoids interest on 120. This is why starting small and early usually beats waiting until you can afford to start big.
Your rate is the return
Paying down a mortgage returns exactly your interest rate, guaranteed and untaxed. At 3% that is unexciting next to most alternatives. At 6.75% it is a genuinely strong risk-free return, which is why extra payments deserve more attention in a high-rate environment than they got in a low-rate one.
Extra Payments, Recasting, or Refinancing?
Extra payments shorten the loan
Your monthly obligation stays the same and you finish earlier. Nothing to apply for, no cost, and you can stop at any time. The flexibility is the point: an extra payment is a decision you can reverse next month.
Recasting lowers the payment
After a lump sum, some servicers will re-amortize the remaining balance over the remaining term, which reduces the monthly payment while keeping your existing rate. It usually costs a few hundred dollars. Worth considering if cash flow rather than payoff date is what you are trying to fix.
Refinancing changes the rate
Only worthwhile when market rates are meaningfully below yours, and it carries closing costs that need to be earned back. Model the break-even in the refinance calculator before assuming it beats simply paying extra.
A Useful Side Effect: Losing PMI Sooner
If you put down less than 20%, extra payments do a second job. They pull your balance down to the point where private mortgage insurance can be cancelled, which removes a monthly cost that was buying you nothing. Work out when PMI can come off your loan and how much extra payments move that date.
Frequently Asked Questions
How much does an extra $200 a month save on a mortgage?
On the sample $375,000 loan at 6.75% over 30 years, an extra $200 a month shortens the term by several years and saves a large multiple of what you actually pay in. The exact figures depend on your rate and balance, which is why the calculator above compares three amounts on the same loan rather than quoting one number. The higher your rate, the more each extra dollar is worth.
Is it better to make extra payments or refinance?
They solve different problems. Refinancing lowers the rate you are charged, which helps most when market rates have fallen well below yours. Extra payments reduce the balance the rate is applied to, which works at any rate and costs nothing to start or stop. If your rate is already low, extra payments are usually the better move. If it is well above current market rates, model the refinance first.
Does making extra payments lower my monthly payment?
No. Extra principal shortens the loan rather than reducing the required payment, so your monthly obligation stays the same and you simply finish earlier. If you want the payment itself to drop, ask your servicer about recasting, which re-amortizes the remaining balance over the remaining term after a lump sum. Recasting keeps your existing rate and typically costs a few hundred dollars.
When is the best time to start making extra payments?
As early as possible. Interest is charged on the outstanding balance, so a dollar paid in year one avoids interest on every remaining month of the loan, while the same dollar in year twenty avoids very little. This is why the same total amount produces dramatically different savings depending on when you start.
Are biweekly payments better than monthly extra payments?
Biweekly schedules produce 26 half-payments a year, which is 13 monthly payments rather than 12. The benefit comes almost entirely from that one extra payment, not from the fortnightly timing. Paying an extra one-twelfth of your payment each month achieves nearly the same result without depending on a servicer offering the programme, and it is easier to stop if your circumstances change.
Should I pay off my mortgage early or invest the money?
Paying down a mortgage is a guaranteed, risk-free return equal to your interest rate, and it is not taxed. Investing has a higher expected return but carries risk and no guarantee. The comparison is close at low mortgage rates and tilts firmly toward paydown at high ones. This calculator quantifies only the mortgage side, which is the half that can be known in advance.