See how much faster you can pay off your mortgage and how much interest extra payments save.
Every mortgage payment is split between interest and principal. Early in the loan, most of your payment covers interest because the balance is large. Any amount you send above the scheduled principal gets subtracted directly from the balance, which permanently shrinks every future interest charge.
The result compounds in your favor. A $200 extra principal payment this month does not just save one month's interest on $200. It saves interest on that $200 for every remaining month of the loan. On a 30-year mortgage at 6.5%, an extra $200 per month can cut roughly five years off the term and save tens of thousands in interest.
The calculator simulates the standard amortization schedule month by month. Each month it subtracts the interest portion of your payment from the balance, then applies the remaining payment amount plus any extra payment directly to principal. It repeats until the balance reaches zero.
It runs this twice: once with your extra payment and once without. The difference is the months saved and the interest saved. This approach is exact because it mirrors how lenders actually apply payments.
The safest source is money that would otherwise sit in a low-yield savings account or get spent on non-essentials. Before adding extra principal, build a small emergency fund and pay off higher-interest debt such as credit cards. A guaranteed 6.5% return by avoiding mortgage interest is attractive, but it is not liquid, and it does not beat a 20% credit card rate.
It depends on your rate, risk tolerance, and tax situation. If your mortgage rate is 7% and you expect 7% from a diversified portfolio, the math is close, but investing keeps your money liquid. At rates above 7%, paying down the mortgage becomes harder to beat with low-risk investments.
Most modern fixed-rate mortgages allow extra principal payments without penalty, but always check your loan agreement. Some loans have prepayment penalties during the first few years. Tell your lender the extra amount is for principal, not an advance payment.
Paying monthly usually saves slightly more interest because the balance drops earlier. However, a single annual lump sum is easier to manage and still produces most of the benefit. The bigger factor is whether you consistently make extra payments at all.
No. Enter only principal and interest. Property taxes and homeowners insurance do not reduce your loan balance, so they do not affect the payoff timeline. If you only know your total monthly payment, subtract your monthly escrow amount before entering it here.