Financing · United States

Extra Mortgage Payment Calculator

What paying more each month does to your payoff date and your total interest — and what it costs you to put off starting.

The short answer

Extra money paid against principal shortens the loan; it does not lower your monthly bill. The part most calculators leave out is that when you start matters more than people expect — the value of each extra dollar decays as the loan progresses, so delaying a year costs far more than a year's worth of payments. And it only works if your servicer applies the money to principal rather than to next month's payment.

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If you change nothing—: —

Paid off in—

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The same extra payment, started later

Start now

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Total interest: —
Interest saved: —

Start in 12 months

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Total interest: —
Interest saved: —

Start in 5 years

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Total interest: —
Interest saved: —

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This is an estimate

These figures cover principal and interest only — escrow for taxes and insurance is unaffected by paying extra, so your actual bill is higher than the payment shown. The projection assumes the extra starts next month, never changes, and is applied to principal on receipt. It assumes no prepayment penalty; check your note. Nothing here is financial or tax advice.

The detail

Why starting a year later costs more than a year

This is the part almost every extra-payment calculator leaves out. They will show you what $250 a month saves over thirty years, and the figure is large enough to be motivating. What they will not show you is what the same $250 a month saves if you begin in five years instead — and the difference is not five years' worth of payments. It is far more.

The reason is in the shape of amortization. Interest is charged on the balance outstanding, so when the balance is large almost every dollar of your scheduled payment is interest, and an extra dollar has two things going for it: a big balance to bite into and a great many remaining months to remove interest from. Both of those advantages shrink as the loan runs down. By the final years your own schedule has already done the work — the balance is small, your payment is nearly all principal, and there is very little interest left for an extra dollar to remove.

So the useful question is not really "how much should I pay extra?" but "when am I going to start?". The calculator answers the second one directly, because it is the one with the bigger number attached and the one nobody asks.

Worth being clear about what this is not: it is not the argument on the mortgage recast page. That one is about a single lump sum and whether to spend its benefit on a lower payment or an earlier finish. This is the recurring case — same payment, earlier date — and the two pair naturally if you have both a lump sum and monthly room.

Three worked examples

What paying extra buys, in dollars

Three loans, run through the same arithmetic as the Tool above. The fourth column is the point of the page: waiting a single year to start costs more than most people expect, because the early dollars are the ones that remove the most interest.

Scenario	Term as is	With extra	Interest saved	Cost of waiting 1 yr	Saved per $1
$100 a month, early in the loan$300,000 at 6%, 30 yr left, $100 extra	30 yr	26 yr 1 mo	$53,346	$4,389	$1.70
$250 a month, the ordinary case$300,000 at 6%, 30 yr left, $250 extra	30 yr	22 yr 1 mo	$106,357	$8,020	$1.61
$500 a month on a low legacy rate$400,000 at 3.25%, 25 yr left, $500 extra	25 yr	18 yr	$55,972	$4,649	$0.52

"Saved per $1" is the interest removed for every extra dollar contributed, averaged across all of them — not the value of one dollar sent in a particular month. It falls as the loan progresses, which is the whole argument for starting now rather than later. None of this lowers your monthly payment; only a recast does that. Your own figures belong in the calculator above; see how we calculate this.

Line by line

What to know before you start

What does an extra mortgage payment actually do?

Every dollar you send above your scheduled payment comes straight off the principal, and interest is charged on the principal that is left. So the dollar does not just save you its own interest for one month — it removes interest from every remaining month of the loan. That is why a modest extra payment sustained over years takes so much more off the total than people expect. What it does not do is change your monthly bill: your scheduled payment stays exactly as it was, and the loan simply ends sooner.

Why does starting early matter so much?

Because the value of an extra dollar decays as the loan progresses, and it decays faster than most people would guess. Early on, your balance is large, so almost all of your scheduled payment is interest and an extra dollar has a great many remaining months to work across. Late on, your own amortization has already done most of the work — the balance is small, your scheduled payment is nearly all principal, and there is little interest left for an extra dollar to remove. The comparison above puts numbers on it: on the default loan, waiting a single year costs several times what that year of contributions was worth.

How much extra do you need to be done in 15 years?

That is the second answer the calculator gives, and it is the more useful direction for anyone working to a deadline — a retirement date, a child starting college. Rather than guessing at amounts until the term looks right, enter the year you want to be finished and read off what it costs per month. The figure is rounded up to the next whole dollar and then re-checked against the schedule, so it genuinely meets the deadline. Rounding down would leave you a month short, which is a quiet kind of wrong we would rather not ship.

Will your servicer apply the extra to principal?

Not necessarily, and this is where good intentions most often leak away. Many servicers treat an overpayment as an advance on your next scheduled payment — marking the loan "paid ahead" — rather than as a principal reduction, and a loan in that state saves you nothing while quietly suppressing next month's auto-draft. Send the extra as a separate transaction where you can, mark it for principal explicitly, and check the following statement to confirm the balance moved. If your servicer offers a standing instruction to apply overpayments to principal, set it once and verify it took.

Is paying extra better than a recast?

They answer different questions, and the difference is worth stating plainly. Extra payments are recurring: your payment stays the same and the loan ends earlier. A recast is a single lump sum followed by re-amortization: your payment drops and the payoff date does not move. Choose extra payments if what you want is to be finished sooner. Choose a recast if what you need is a smaller bill each month, and be aware that a servicer fee and a minimum lump sum usually apply. Neither changes your interest rate — only a refinance does that.

Should you pay extra at all?

Paying down a mortgage returns exactly your interest rate, guaranteed and with no market risk, which is a genuinely good return when rates are high and a mediocre one when they are low. Set against that: the money becomes equity, and equity is not spendable without selling or borrowing against the home. The usual comparisons are an employer retirement match you are not capturing, debt at a higher rate than your mortgage, and an emergency fund you do not yet have — each of which normally comes first. This is a trade-off to think through, not advice, and none of it is tax advice either.

Also asked

Common questions about paying a mortgage down early

Does paying extra lower your monthly payment?

No. Your scheduled payment is fixed by your original amortization and does not move because you paid more, however far ahead you get. What extra payments buy is time, not room in the monthly budget. If a lower monthly bill is what you actually need, a recast re-amortizes the remaining balance at your existing rate for a modest servicer fee, and a refinance replaces the loan entirely. Confusing the two is the single most common misunderstanding in this area.

Is it better to pay extra monthly or once a year?

Monthly, marginally, because each payment starts removing interest sooner than it would if the money sat until December. But the gap between the two is small compared with the gap between doing it and not doing it, and much smaller than the cost of starting later. If a single annual payment after a bonus is the version you will actually sustain, that version wins.

Do biweekly payments save more than paying extra each month?

Not by any mechanism of their own. Paying half your mortgage every two weeks produces 26 half-payments a year, which is 13 monthly payments rather than 12 — the saving comes entirely from that one extra payment, not from the fortnightly rhythm. You can produce the same result by adding a twelfth of your payment to each month yourself, for free. Be wary of third-party biweekly services that charge a setup and per-transfer fee for this, and check that your servicer applies each half-payment on receipt rather than holding it until a full payment has accumulated.

Does an extra payment reduce interest or principal?

Principal, provided it is designated that way. Interest is not a balance you can pay down — it is charged each month on whatever principal remains, so the only way to reduce future interest is to reduce the principal that generates it. This is also why the order matters: an overpayment applied to next month's scheduled payment instead of to principal removes no interest at all.

Is there a penalty for paying a mortgage off early?

Usually not. Federal rules that took effect in 2014 sharply restrict prepayment penalties on most residential mortgages, and where one exists it must be disclosed and is limited in size and duration. Older loans and some non-qualified mortgages are the exceptions. It costs nothing to check the note or ask your servicer directly before making a large payment, and it is worth doing rather than assuming either way.

Principal you pay down becomes equity, and equity is not cash until you sell or borrow against it — the seller net proceeds calculator shows what a sale would actually hand back.

Amortization, principal and recast, defined →

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