Lump Sum Mortgage Payment Calculator
A bonus, an inheritance, or a good year — see exactly what putting it into the mortgage does. Compare the same $25,000 paid all at once against the same amount spread over five years, with payoff dates and total interest for each.
Your numbers
From your latest mortgage statement
A bonus, inheritance, or savings
Your numbers stay in this browser. Nothing is sent anywhere unless you save a scenario to your account.
Add your current loan balance, your interest rate, years left on the loan and lump sum to put in and your answer appears here.
How to Use This Lump Sum Calculator
- 1.Enter your balance, rate, and years left and the amount you could put in.
- 2.Compare now against later — the calculator puts the same total in all at once and spread over several years (five unless you change it under More options), so the gap between them is purely the cost of waiting.
- 3.Check the recast figure if a lower payment matters more to you than an earlier payoff date.
What a Lump Sum Actually Does
It goes entirely to principal
A scheduled payment is split between interest and principal, and early in a loan most of it is interest. A lump sum is different: none of it is interest, so the whole amount comes off the balance immediately. Every month afterwards, interest is charged on that smaller number, which is why one payment keeps returning value for the remaining life of the loan.
The payment does not move, the finish line does
This surprises people. After a large lump sum the monthly obligation is unchanged, so the household budget feels no different. What changed is the number of payments remaining. If you need the monthly figure to fall instead, recasting is the mechanism — it re-amortizes the reduced balance over the remaining term at your existing rate.
Liquidity is the real trade
Money paid into a mortgage is gone from your balance sheet as cash and can only be retrieved by borrowing against the house again, usually at a worse rate and with costs attached. The interest saving is real, but so is the loss of optionality. This is the argument for keeping an emergency fund fully intact before sending anything extra.
Frequently Asked Questions
Should I use my bonus to pay down my mortgage?
It depends on what else the money would do. A lump sum against your mortgage is a guaranteed, untaxed return equal to your interest rate, and it is permanent — the balance never comes back. That is a strong return at 6-7% and a weak one at 3%. Before doing it, clear any higher-rate debt, keep an emergency fund intact, and take any employer retirement match you would otherwise forfeit. A lump sum into a mortgage is very hard to get back out, which is the main argument against it.
Is it better to pay a lump sum or extra monthly payments?
A lump sum wins if the totals are equal, because the money starts avoiding interest sooner. The comparison above puts the same $25,000 in two ways: all at once after the first year, and $5,000 a year for five years. The single payment finishes earlier and costs less interest, purely because each dollar arrives sooner and therefore skips more remaining months. In practice most people cannot choose — the bonus arrives when it arrives — so the useful question is whether to hold it or apply it, not which schedule is theoretically better.
Does a lump sum payment lower my monthly mortgage payment?
Not by itself. A lump sum reduces the balance and shortens the loan, but the required monthly payment stays exactly where it was, so you simply finish earlier. If you want the payment itself to fall, ask your servicer about recasting: after a lump sum they re-amortize the remaining balance over the remaining term, which lowers the payment while keeping your existing rate. Recasting typically costs a few hundred dollars and is not offered on every loan type.
When is the best time to make a lump sum mortgage payment?
As early in the loan as you can. Interest is charged on the outstanding balance, so a dollar paid in year two avoids interest on more than 330 remaining months, while the same dollar in year twenty avoids interest on 120. The effect is large: the calculator above puts the same total in now and spread over several years, and the two still land years apart. If you are choosing between paying now and paying at the end of the year, now is worth real money.
Should I pay off my mortgage or invest my bonus?
Paying down the mortgage is a certain return equal to your rate, with no tax on the gain and no volatility. Investing has a higher expected return over long periods but no guarantee and real sequence risk. The comparison is genuinely close at low mortgage rates and tilts firmly toward paydown at high ones. This calculator quantifies only the mortgage half, because that is the half that can be known in advance rather than estimated.
Can my lender refuse a lump sum payment, or charge me for it?
Prepayment penalties are rare on modern owner-occupied US mortgages and are prohibited entirely on qualified mortgages after the first three years, but they still exist on some portfolio and non-qualified loans, so check your note. The more common problem is administrative: money sent without instruction is often applied to next month’s payment rather than to principal. Tell your servicer in writing that the payment is principal-only, then confirm the balance moved.