Extra Payment Calculator
See how much you can save by making extra mortgage payments. Calculate interest savings and time reduced on your loan.
What is an Extra Payment Calculator?
The Extra Payment Calculator shows the dramatic impact of making additional principal payments on your mortgage or loan. By adding even small amounts to your regular monthly payment, you can save tens of thousands in interest and shave years off your loan term. This powerful tool reveals exactly how much you'll save and when you'll be debt-free.
💡 Key Benefit: See exactly how much money and time you'll save with extra payments. Even $100-200 extra per month on a 30-year mortgage can save $50,000+ in interest and cut 5-7 years off your loan term.
Extra Payment Calculator
See how extra payments accelerate your loan payoff
Loan Details
When to Use This Calculator
Use this calculator when you receive a raise or bonus and want to see the impact of applying it to your mortgage, when considering whether to make extra payments versus investing elsewhere, or when creating a debt payoff strategy. It's also valuable for comparing different extra payment amounts to find the sweet spot for your budget.
Who Benefits
Homeowners with mortgages, anyone with an auto loan or personal loan, individuals who received a windfall (bonus, tax refund, inheritance), financial planners optimizing debt payoff strategies, and those deciding between paying down debt versus other financial goals all benefit from visualizing the true impact of extra payments.
How to Use This Calculator
Follow these simple steps to get accurate results:
- 1Enter Your Current Loan Amount
Input your remaining principal balance (found on your latest mortgage statement) or the original loan amount if you just started. This is the amount you still owe, not the original borrowed amount.
- 2Add Your Interest Rate
Enter your current annual interest rate (APR). This is the rate you're paying, which you can find on your loan documents or latest statement. Even a small rate difference matters significantly over time.
- 3Select Your Loan Term
Choose the original loan term length (10, 15, 20, or 30 years). If you're several years into your loan, still select the original term - the calculator will show your original payoff timeline.
- 4Enter Extra Monthly Payment
Input the additional amount you plan to pay each month beyond your regular payment. Start with an amount you can comfortably sustain - even $50-100 makes a significant difference over time.
Understanding Your Savings
Interest Saved
This is the total amount of interest you will NOT pay by making extra payments. This money stays in your pocket instead of going to the lender. For a typical 30-year mortgage, extra payments of $200/month can save $40,000-60,000 in interest.
Time Saved (Years and Months)
The amount of time you'll cut off your loan term. Making extra principal payments accelerates your payoff dramatically. A $250,000 mortgage at 6.5% paid off with an extra $200/month saves about 6.5 years.
New Payoff Date
The date you'll make your final payment with extra payments included. This moves significantly earlier than your original payoff date, helping you achieve debt freedom years sooner.
Total Interest Comparison
Compare what you'll pay in interest with versus without extra payments. The difference can be staggering - often 30-40% less total interest paid over the life of the loan.
Formula
Extra payments reduce principal faster, which decreases the interest charged in future months (since interest = principal × rate). This creates a snowball effect where more of each payment goes to principal.
Example
On a $250,000 mortgage at 6.5% for 30 years: Regular payment = $1,580/month, total interest = $318,861. Add $200 extra: New payoff = 23.5 years, total interest = $245,107, savings = $73,754. That $200/month saves over $73K!
Extra Payment Strategies
Where to Find Money for Extra Payments
- Annual Raises: Direct your next raise entirely to extra mortgage payments
- Tax Refunds: Apply your annual refund as a lump sum extra payment
- Bonuses and Commissions: Use work bonuses to make large principal payments
- Eliminate Subscriptions: Cancel unused services and redirect to mortgage
- Side Income: Dedicate freelance or gig economy earnings to extra payments
- Found Money: Birthday gifts, rebates, and cash windfalls go straight to principal
Bi-Weekly Payment Strategy
Instead of making one monthly payment, make half-payments every two weeks (26 half-payments = 13 full payments per year instead of 12). This strategy adds one extra payment annually and can save 4-6 years on a 30-year mortgage. Many lenders offer automatic bi-weekly programs, but verify there are no fees - you can achieve the same result by adding 1/12 of your monthly payment to each regular payment.
Round-Up Method
If your monthly payment is $1,847, round up to $2,000. This adds $153/month without feeling burdensome. The psychological benefit of a "clean" payment amount often makes it easier to sustain than committing to a specific extra payment. Over 30 years, this simple rounding can save 5+ years and $40,000+ in interest.
Percentage-Based Extra Payments
Commit to paying an extra 10%, 20%, or 25% beyond your required payment. As you get raises, the extra amount grows automatically. For example, on a $1,500 payment, 20% extra = $300/month = ~7 years saved on a 30-year loan.
Important Considerations
- Check for Prepayment Penalties: Most modern mortgages don't have them, but verify your loan allows extra payments without fees
- Specify "Principal Only": When making extra payments, clearly mark them as principal-only to ensure they reduce your balance rather than prepaying interest
- Emergency Fund First: Only make extra payments after you have 3-6 months of expenses saved. Don't sacrifice liquidity for mortgage payoff
- Consider Other Debt: If you have credit card debt at 18-24% interest, pay that off before extra mortgage payments at 6-7%
- Investment Comparison: If you can reliably earn 8-10% in investments, it may make more sense to invest extra money rather than pay down a 4% mortgage
- Tax Deduction Impact: Factor in that mortgage interest is tax-deductible (though less valuable after recent tax law changes with higher standard deductions)
Lump Sum vs. Monthly Extra Payments
A single lump sum of $2,400 at the beginning of the year saves more interest than $200/month over the year, because it reduces principal earlier. However, consistent monthly extra payments are easier to budget and sustain. The best strategy? Make regular monthly extras AND apply windfalls (tax refunds, bonuses) as lump sums when you receive them.
When Extra Payments Don't Make Sense
- You have high-interest debt (credit cards, personal loans, payday loans)
- You lack an emergency fund covering 3-6 months of expenses
- Your employer offers 401(k) matching you're not maximizing (that's guaranteed 100% return)
- Your mortgage rate is very low (under 4%) and you can invest at higher returns
- You might move or refinance in the next few years
- You're saving for a major near-term goal (wedding, college, business startup)
Related Calculators
Mortgage Calculator
Calculate your regular mortgage payment and see full amortization schedule
Refinance Calculator
Compare refinancing to a lower rate versus making extra payments
Debt Snowball Calculator
Apply extra payment strategy across multiple debts
Amortization Calculator
See detailed month-by-month payment breakdown
Loan Calculator
Calculate payments for any type of loan
Frequently Asked Questions
How much extra should I pay on my mortgage each month?
Start with what you can comfortably afford without sacrificing emergency savings or retirement contributions. Even $50-100/month makes a significant impact. A good target is 10-20% of your regular payment. For a $1,500 payment, adding $150-300 extra is ideal. The key is consistency - sustainable extra payments beat sporadic large payments.
Do extra mortgage payments go to principal or interest?
All extra payments should go toward principal reduction, not interest. Always specify "apply to principal" when making extra payments, either online, by check memo, or by calling your lender. Some servicers may try to hold extra money in suspense accounts or apply it to next month's payment if not clearly marked.
Can I make one large extra payment instead of monthly extras?
Yes, lump sum payments work great and save even more than monthly extras if made early in the year. However, most people find monthly extras easier to budget and sustain. The optimal strategy combines both: make consistent monthly extras plus apply bonuses, tax refunds, and windfalls as lump sums when received.
Will extra payments lower my monthly mortgage payment?
No, your required monthly payment stays the same. Extra payments reduce your principal balance and total interest paid, shortening your loan term rather than reducing the monthly amount due. You still owe the same payment each month, but you'll make fewer total payments.
Should I pay extra on my mortgage or invest the money?
It depends on your mortgage rate versus expected investment returns. If your mortgage is 7% and you can reliably earn 4% investing, pay extra on the mortgage (guaranteed 7% "return"). If your mortgage is 3.5% and you expect 8-10% stock market returns, investing may be smarter. Also consider risk tolerance, tax implications, and the psychological benefit of being debt-free.
Does refinancing eliminate the benefit of extra payments?
Not entirely. If you refinance to a lower rate, you can continue making extra payments on the new loan and save even more. However, if you refinance and restart the clock on a new 30-year term without making extra payments, you may end up paying more total interest despite the lower rate. Best strategy: refinance to lower rate AND continue extra payments.
What if I need the money I paid extra on my mortgage?
Extra principal payments cannot be easily retrieved - your home equity is illiquid. You'd need to sell, refinance (with cash-out), or get a HELOC to access it. This is why emergency funds are critical - never make extra mortgage payments until you have 3-6 months expenses saved in liquid accounts.
How do I verify my extra payment was applied correctly?
Check your next mortgage statement to confirm: (1) the extra amount was received, (2) it reduced your principal balance by that amount, and (3) it wasn't held in suspense or applied to next month. Keep records of all extra payments. If applied incorrectly, contact your servicer immediately to correct it and ensure future payments are handled properly.
Disclaimer: This calculator provides estimates for informational purposes only. Results should not be considered financial, medical, or professional advice. Always consult with qualified professionals for decisions affecting your finances, health, or wellbeing.