Extra Mortgage Payment Impact Calculator

Making even small extra payments on your mortgage each month can save tens of thousands of dollars in interest and shave years off your loan. This happens because mortgages are front-loaded with interest — in early years, most of your payment goes toward interest rather than principal.

How mortgage amortization works: Each monthly payment is split between interest and principal:

Monthly interest = Remaining balance × Monthly interest rate

The rest of your payment reduces the principal. As the principal falls, the interest portion of each payment decreases, and more goes to principal. This is why extra payments early in the loan have the most impact — they reduce the principal that future interest is calculated on.

The extra payment formula: For a loan with balance B, monthly rate r, remaining term n months, and extra payment E per month:

The new effective payment = Standard payment + E New remaining term = −ln(1 − B × r / (Standard payment + E)) ÷ ln(1 + r)

Practical examples (on a $300,000 30-year mortgage at 7% interest):

• Standard payment: $1,995/month — total interest: ~$418,527
• Extra $100/month: saves $33,000 in interest, pays off 4 years earlier
• Extra $200/month: saves $57,000 in interest, pays off 7 years earlier
• Extra $500/month: saves $107,000 in interest, pays off 14 years earlier

Other strategies:

• Bi-weekly payments: Pay half your monthly payment every two weeks. You end up making 26 half-payments = 13 full payments/year instead of 12. This one extra payment per year can save 5–6 years on a 30-year mortgage.
• Annual lump sum: Apply bonuses, tax refunds, or windfalls directly to principal.
• Round up payments: If your payment is $1,847, pay $2,000. Simple and painless.

Important: Always specify that extra payments go to principal, not toward next month’s payment. Contact your lender to confirm how to designate extra payments.