Extra Mortgage Payment Savings Calculator

How Extra Mortgage Payments Work Every dollar you pay above your required monthly payment goes directly to reducing your principal balance. A lower principal means less interest accrues each month — which creates a compounding snowball effect. Even a modest extra $100–$200/month can cut years off your mortgage and save tens of thousands in interest.

Standard Monthly Payment Formula P = L × [r(1+r)^n] / [(1+r)^n − 1]

Where:

• P = monthly payment
• L = loan balance
• r = monthly interest rate (annual rate ÷ 12)
• n = total number of payments (years × 12)

Amortization With Extra Payments Each month, interest accrued = remaining balance × monthly rate. The regular payment covers that interest plus a small slice of principal. Your extra payment eliminates additional principal directly, compressing future interest.

Worked Example Loan: $300,000 | Rate: 6.5% | Term: 30 years | Extra payment: $200/month

Normal monthly payment: $1,896 Total interest (no extra): $382,560 Total interest (with extra): ~$280,000 Interest saved: ~$102,000+ Time saved: ~6 years

Why This Matters So Much In the early years of a mortgage, most of your payment is interest — not principal. On a $300k loan at 6.5%, the first payment is roughly $1,625 interest and only $271 principal. Extra payments attack principal when it matters most, cutting the most expensive early interest.

Refinancing vs Extra Payments Refinancing to a lower rate can save more — but has closing costs. Extra payments are free, flexible, and reversible (you can stop anytime). Both strategies can be combined for maximum effect.