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Mortgage Extra Payment Calculator

See the interest and years an extra payment saves

How it is calculated

First the regular payment is found from the standard fixed-rate formula: P = L × i / (1 − (1 + i)−n), with loan L, monthly rate i = annual rate / 100 / 12 and n = years × 12 months (rounded to a whole month). At 0 percent the payment is L / n. Total scheduled interest is P × n − L. The tool then simulates month by month paying P plus the extra amount: each month interest = balance × i, the rest reduces the balance, and the last payment is capped at what is owed. It stops when the balance is below half a cent. Months saved = n minus months actually needed; interest saved = scheduled interest minus simulated interest. The amounts are shown in US dollars. The extra is a fixed monthly add-on; fees, taxes, insurance and rate changes are not modelled.

Worked example

Loan 250,000, rate 6 percent, 30 years, extra 200 per month. Monthly rate i = 0.005 and n = 360, so the regular payment is P = 1,498.88. Scheduled interest is 1,498.88 × 360 − 250,000 = about 289,595.47. Paying 1,698.88 a month clears the balance in 267 months instead of 360, so 93 months are saved. Interest drops to about 203,362.51, which makes the saving $86,232.96. That is about 7 years and 9 months sooner.

Try this example →

Common mistakes

  • Entering the rate as a decimal, such as 0.06. The field is the annual percentage, so write 6.
  • Putting the current monthly payment in the extra box. Extra is only the additional amount on top of the regular payment, which the tool computes itself.
  • Entering the remaining term and the original loan amount together. Use the current balance as principal together with the years left, or the savings will be wrong.
  • Expecting a result for a negative extra payment. Extra must be 0 or more; at 0 the tool shows 0 months and $0.00 saved.
  • Forgetting that a lender may charge prepayment penalties or apply extra money to future instalments instead of principal. The tool assumes all of it reduces principal.

Sources

About this calculator

This calculator builds two amortization schedules side by side: one where you pay only the scheduled principal-and-interest amount, and one where a fixed extra amount goes straight to principal every month. Because mortgage interest is charged on the remaining balance, every extra dollar of principal paid early stops accruing interest for the rest of the loan — which is why even a modest extra payment can cut years off a 30-year term.

Homeowners use this to decide whether to round up a payment, apply a bonus or tax refund, or set up biweekly payments that effectively add one extra payment per year. It's also the standard way loan officers and financial planners illustrate the trade-off between paying down a mortgage faster versus investing the same money elsewhere.

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Comments (1)

  • Editorial team

    Savings here depend on the extra going to principal on the date you pay it. Ask the servicer how extra money is applied, because some will hold it as an early next payment instead, and check the contract for any prepayment charge, since neither is part of this result. A practical way to use the tool is to run two or three extra amounts and see what each step adds to the months saved. What extra amount are you weighing?

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