Extra Mortgage Payment Calculator
See how extra monthly, annual, or one-time payments can shave years off your mortgage and save tens of thousands in interest.
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Extra Payments
Investment Comparison
Compare paying extra toward your mortgage vs. investing the same amount in the market. See which strategy builds more wealth over the life of your loan.
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|---|---|---|
| Total Interest | — | — |
| Payoff Date | — | — |
| Total Paid | — | — |
Show amortization schedule
How Extra Mortgage Payments Work #
When you make an extra payment on your mortgage and direct it toward principal, it immediately reduces your outstanding loan balance. Because interest is calculated on the remaining balance each month, a lower balance means less interest accrues the following month — and every month after that. This compound effect is powerful: over the life of a 30-year loan, even modest extra payments can save tens of thousands of dollars in interest and shave years off your repayment timeline.
For example, on a $320,000 conventional loan at 6.5% interest over 30 years, your standard monthly principal and interest payment is about $2,023. By adding just $150 per month in extra principal payments, you could save over $47,000 in total interest and pay off your mortgage roughly 5.5 years early. Bump that to $300 per month and the savings jump to over $80,000 with nearly 9 years cut from your loan. The earlier you start making extra payments, the greater the savings, because there is more outstanding principal for the reduction to compound against.
Monthly vs. Annual vs. Lump Sum #
Extra monthly payments are the most efficient strategy because they reduce your principal at the earliest possible point each month, which means less interest accrues over each subsequent billing cycle. If you can afford to increase your monthly payment even by a small amount, the cumulative effect over decades is substantial. Setting up an automatic extra payment through your servicer is the easiest way to stay consistent.
Annual extra payments — funded by a year-end bonus, tax refund, or other windfall — are the next best option. They reduce your balance once per year, creating a step-down in interest charges for the following twelve months. A one-time lump sum payment, from an inheritance, home sale proceeds, or other large cash event, creates an immediate and permanent reduction in your balance. The calculator above lets you combine all three strategies to model your exact scenario and see the total impact.
When Extra Payments May Not Make Sense #
Before accelerating your mortgage payoff, check your loan documents for a prepayment penalty. While rare on conventional loans originated after 2014, some older mortgages, jumbo loans, or specialty products may charge a fee for early repayment. If your mortgage rate is lower than what you could earn by investing the extra money — for example, a 3% mortgage rate versus a 7% average stock market return — putting extra cash into investments may build more wealth over time, especially if you have decades until retirement.
Financial advisors also recommend maintaining an emergency fund of three to six months of living expenses before directing extra money toward your mortgage. Mortgage principal cannot be easily accessed once paid — unlike savings or investment accounts — so make sure your financial foundation is solid first.
How to Make Extra Payments #
Contact your loan servicer to confirm how extra payments are applied. Some servicers will advance your due date rather than reduce your principal balance — which does not save you any interest. You need to explicitly request that extra funds be applied to principal. Most online mortgage portals have a dedicated "additional principal" field when making a payment. If you pay by check, write "apply to principal" in the memo line.
Many servicers support automatic extra payments, which you can set up online or by phone. This ensures consistency and removes the temptation to skip a month. After your first extra payment, check your next statement to verify the additional amount was applied to principal and your balance decreased accordingly.
Frequently Asked Questions #
How much can I save by paying extra on my mortgage?
The savings depend on your loan balance, interest rate, and how much extra you pay. On a $320,000 loan at 6.5%, adding $150 per month can save over $47,000 in interest and cut roughly 5.5 years off your term. At $300 per month, the savings exceed $80,000 and nearly 9 years. Use the calculator above with your own numbers to see your exact savings.
Should I make extra monthly payments or one large annual payment?
Extra monthly payments are slightly more efficient because they reduce principal sooner, meaning less interest accrues each month. However, annual payments from a bonus or tax refund are the next best option. The most important factor is consistency — any extra principal payment saves money over the life of your loan.
Do extra payments go toward principal or interest?
When you specifically direct extra payments to principal, they reduce your outstanding balance without covering any interest. This is different from your regular payment, which is split between principal and interest. Always instruct your servicer to apply extra payments to principal to maximize savings.
Is there a penalty for paying off my mortgage early?
Most conventional, FHA, and VA loans originated after 2014 do not carry prepayment penalties under Dodd-Frank Act regulations (which apply to "qualified mortgages" up to the conforming loan limit). Some older loans, non-QM products, or certain jumbo loans above the conforming limit may still include a penalty clause. Check your loan documents or contact your servicer before making large extra payments to confirm.
How do I tell my lender to apply extra to principal?
Contact your loan servicer directly or use the "additional principal" field in your online payment portal. If paying by check, write "apply to principal" on the memo line. After making your first extra payment, verify on your next statement that the balance decreased by the full extra amount.