Mortgage Extra Payment Calculator
Your Savings Report
New Payoff Time:
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Time Saved:
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Total Interest Saved:
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Total Principal & Interest Paid:
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How Extra Mortgage Payments Save You Money
One of the most effective guaranteed returns on investment available to homeowners is paying off a mortgage early. By applying an extra payment specifically toward your loan's principal balance, you reduce the amount of money that accrues interest. This creates a compounding effect that can shave years off your loan term and save tens of thousands of dollars in interest.
This Mortgage Extra Payment Calculator allows you to visualize exactly how a small increase in your monthly budget translates into massive long-term savings.
Understanding Mortgage Amortization
Mortgages use an amortization schedule, meaning that in the early years of your loan, the majority of your monthly payment goes toward interest, not the principal. For a standard 30-year loan, it can take over a decade before you are paying more principal than interest each month.
When you make an extra principal payment, you skip ahead on this amortization schedule. Every dollar paid extra today prevents that dollar from being charged interest for the remaining life of the loan.
Benefits of Paying Off Your Mortgage Early
- Interest Savings: As shown in the calculator above, even an extra $50 or $100 a month can save you significant amounts over 15 or 30 years.
- Financial Freedom: Eliminating your largest monthly expense frees up cash flow for retirement, travel, or other investments.
- Home Equity: You build equity faster, giving you more financial leverage if you need to sell or refinance.
- Guaranteed Return: Paying off a 5% mortgage is mathematically equivalent to a guaranteed 5% after-tax return on your money (assuming you take the standard deduction).
Example Calculation
Consider a homeowner with a $250,000 mortgage balance at a 5% interest rate with 30 years remaining.
- Standard Path: They will pay roughly $233,263 in total interest over the life of the loan.
- With +$100/month: If they add just $100 to the monthly payment, they pay off the loan 4 years and 3 months early and save over $38,000 in interest.
Strategic Ways to Make Extra Payments
You don't always need to commit to a monthly increase. Here are other strategies to use with this calculator:
- Bi-Weekly Payments: Paying half your monthly mortgage payment every two weeks results in 26 half-payments (or 13 full payments) per year. This amounts to one extra payment annually without feeling the pinch.
- Windfalls: Applying tax refunds, work bonuses, or inheritance money directly to the principal.
- Rounding Up: Round your mortgage payment up to the next hundred dollar mark.
Disclaimer: This calculator is for educational purposes only. It assumes a fixed interest rate and that no penalties apply for early repayment. Actual amortization schedules may vary slightly based on your lender's specific calculation methods. Consult a financial advisor before making significant changes to your repayment strategy.