How extra mortgage payments save you money
Every dollar you pay above your required monthly payment goes straight toward your loan's principal — the amount you actually owe — instead of being split between principal and interest like your regular payment. A smaller principal means less interest accrues the following month, which snowballs: the loan not only gets paid off faster, it also costs less in total interest over its life.
This effect compounds most in the early years of a mortgage, when the bulk of each regular payment goes toward interest rather than principal. That's why even a modest extra payment — $100 or $200 a month — made consistently from early on can shave years off a 30-year loan and save tens of thousands of dollars in interest.
This calculator compares your loan paid on the standard schedule against the same loan with your chosen extra amount applied every month, and shows the payoff date, total interest and total paid for both scenarios side by side.
How much can extra payments save? An example
Take a $320,000, 30-year loan at 6.75%. The required payment is $2,075.51 and, paid on schedule, the loan costs $427,185 in interest. Here's what adding a fixed amount every month from the first payment does:
An extra $200 a month — less than 10% of the payment — saves more than $112,000 and takes almost seven years off the loan. The first dollars are the most effective ones: $100 a month saves about $66,000, while going from $200 to $500 adds roughly $84,000 more in savings.
Biweekly payments
Paying half your mortgage payment every two weeks adds up to 26 half-payments — the equivalent of 13 full payments a year instead of 12. On the example loan, that works like an extra $172.96 a month: the loan is paid off in about 24 years and saves roughly $100,900 in interest.
Be careful with third-party "biweekly programs" that charge setup or transaction fees for this. You can get the same result for free by adding one-twelfth of your payment to each monthly payment, or by making one extra payment a year.
One-time lump sums and recasting
Extra payments don't have to be monthly. A bonus, tax refund or inheritance applied to principal works the same way. On the example loan, a single $10,000 payment in year 3 ends the loan 27 months early and saves about $47,000 in interest.
Normally your required payment stays the same after a lump sum; the loan just ends sooner. If you'd rather lower the payment, ask your servicer about a recast: for a small fee they recalculate the payment on the new balance over the remaining term. In the example, a recast after the $10,000 payment would lower the required payment from $2,075.51 to about $2,008.35. The amortization schedule guide explains why lump sums have such an outsized effect early in the loan.
Should you pay extra on your mortgage?
Paying down a mortgage early gives you a guaranteed return equal to your interest rate, plus the security of owning your home sooner. Before you commit, it's usually wise to make sure that:
- You have an emergency fund — money paid into your mortgage is hard to get back out.
- You've paid off higher-interest debt, such as credit cards, first.
- You're contributing enough to retirement accounts to get any employer match.
- If you have PMI, you know how extra payments help you reach the point where you can cancel it (see our PMI guide).
If you prefer a guaranteed payoff date over flexibility, compare this approach with simply taking a shorter loan in 15-year vs 30-year mortgage.
How to make sure extra payments count
- Check for a prepayment penalty. Most mortgages today don't have one, but confirm in your loan documents.
- Mark it as principal. Use your servicer's "additional principal" option; otherwise some servicers hold the money or apply it to your next payment.
- Verify on your statement that the extra amount reduced your principal balance.
- Automate it if you can — a small automatic extra payment is easier to sustain than occasional large ones.
Note: this tool provides an estimate based on standard amortization and is not financial advice.