How this extra mortgage payment calculator works
Enter your original loan terms — amount, rate, and term — and the calculator derives your fixed monthly principal-and-interest payment. For an existing mortgage, flip the toggle and enter today's remaining balance from your statement; the required payment doesn't change (that's how fixed mortgages work), but the simulation starts from where you actually are. Then add an extra monthly amount, a one-time lump payment this month, or both. The calculator runs both amortization schedules month by month and reports the new payoff date, the time cut off the loan, and the headline number: total interest saved.
The chart is the argument in picture form. The blue line is your balance on the standard schedule; the yellow line is the balance with extra payments; the shaded gap between them is principal you've eliminated ahead of schedule. That shaded region is where the savings come from — every dollar inside it is a dollar that would otherwise have been accruing interest at your note rate, month after month, for years.
Why small extra payments save absurd amounts
A mortgage is compound interest running against you, which means prepayment is compound interest running for you. When you send an extra $200 to principal in year one of a 30-year loan, you don't just save $200 — you save the interest that $200 would have generated every month for the next 29 years. At 6.5%, a single early $200 payment quietly cancels roughly $1,200 of future interest. Stack that monthly and the numbers get dramatic: $200/month extra on a $400,000 loan at 6.5% saves about $112,000 in interest and ends the mortgage five and a half years early — the calculator's default scenario, so you can see it above.
The flip side: the same dollar prepaid late in the loan saves far less, because there's less time and less interest left to avoid. By year 25, most of each scheduled payment is principal anyway. This is why the shaded gap on the chart is widest when extra payments start early, and why the standard advice — if you're going to prepay, start now — is mathematically sound rather than motivational fluff.
Prepaying vs. recasting: same money, different lever
Extra principal payments do not lower your required monthly payment — they shorten the loan. If what you actually want is breathing room in the monthly budget, the tool for that is a recast: you make a lump-sum principal payment (servicers typically require $5,000–$10,000 minimum), pay a small fee ($150–$500), and the lender re-amortizes the smaller balance over your original remaining term. Payment drops; payoff date stays put. Prepaying maximizes interest saved; recasting maximizes cash flow. They can be combined — recast for safety, then keep voluntarily paying the old amount, which recreates the prepayment math while keeping the lower required payment as an emergency fallback. Not all loans are recastable (FHA/VA generally aren't), so ask your servicer.
Pay down the mortgage, or invest the difference?
Extra principal earns a guaranteed, risk-free return equal to your mortgage rate. That single sentence settles most of the debate once you take it seriously. At today's 6.5%+ rates, prepaying beats bonds outright and competes credibly with stocks' historical ~7% — except the mortgage's return is certain and the market's isn't. At a pandemic-era 3% rate, the math reverses: high-yield savings alone may outyield the mortgage, and long-run equity returns likely will. In between, three honest tiebreakers: whether you itemize (a deducted 6.5% costs you less than 6.5%), whether you'd genuinely invest the money rather than spend it, and how much you value the psychological finish line of a paid-off house — which is real, even if a spreadsheet can't hold it. To see what the alternative path compounds into, run the same monthly amount through the multi-phase compound interest calculator or the dollar-cost averaging calculator and compare totals honestly — including the volatility band, not just the average.
One ordering rule outranks all of this: extra mortgage payments are illiquid. Once sent, that money is drywall — retrievable only by selling, refinancing, or borrowing it back with a HELOC, at whatever rates prevail then. Emergency fund first, high-interest debt second, employer match third. Prepay with money you won't need back.
Frequently asked questions
How much does one extra payment a year save?
Typically 4–6 years and tens of thousands of dollars on a 30-year loan. Spread it monthly (payment ÷ 12 added each month) for the same effect without needing a lump sum.
Do extra payments lower my monthly payment?
No — the required payment is fixed. Extras shorten the loan and cut total interest. To lower the payment itself, you'd recast or refinance.
Recasting vs. prepaying — what's the difference?
Prepaying keeps your payment and shortens the loan. Recasting re-amortizes a lump-sum-reduced balance over the original term: lower payment, same payoff date, small fee. Interest savings favor prepaying; cash flow favors recasting.
Pay extra or invest instead?
Prepaying earns your mortgage rate, guaranteed. Above ~6%, that's hard to beat risk-adjusted; below ~4%, investing usually wins on expectation. In between: taxes, temperament, and whether you'd actually invest it.
Why do early payments save more?
Each prepaid dollar stops accruing interest for the loan's remaining life — 28 years of avoided interest in year 2, only 5 in year 25. Start early or accept smaller savings.
Lump sum or monthly extra?
Dollar for dollar, sooner wins — a lump today beats the same total dripped out later. But the sustainable monthly habit you keep beats the lump you never send. Model both above.
Do I have to tell my servicer it's for principal?
Yes. Some servicers apply extras to next month's payment or hold them in suspense. Use the principal-only option and verify the balance drop on your next statement.
Are there prepayment penalties?
Rare on post-2014 conforming U.S. loans. Some jumbo, non-QM, and investment-property notes carry them for the first 3–5 years — check your note before sending large lumps.
Does the biweekly trick work?
Yes — 26 half-payments equal 13 monthly payments, one extra per year. The savings come from the extra payment, not the timing. Do it yourself free; skip paid biweekly programs.
Should I prepay before having an emergency fund?
No. Prepaid principal is illiquid — you can't un-send it without refinancing, borrowing, or selling. Emergency fund, high-interest debt, and employer match all come first.
Will prepaying hurt my tax deduction?
It shrinks the interest you pay, so any deduction shrinks too — but a deduction only refunds your marginal rate on each dollar. Most households take the standard deduction anyway.
This calculator is for education, not financial advice. It models principal and interest only — taxes, insurance, and escrow are excluded — and assumes your rate is fixed. Confirm prepayment handling and any penalties with your servicer.