Quick answer: Adding even $100–$200 a month to your principal can cut years off your mortgage and tens of thousands in interest, because every extra dollar skips all the future interest it would have accrued. Enter an amount in Extra per month or Extra per year below to see your exact savings and new payoff date.
Your scheduled mortgage payment is split between interest and principal — and in the early years, most of it is interest. When you pay extra, that money goes entirely to principal, which permanently removes all the interest that balance would have earned for the rest of the loan. That is why small extra payments compound into large savings.
This calculator shows the payoff in real numbers: how much interest you save, how many years you shave off, and a side-by-side amortization comparison.
Tip: enter an amount in 'Extra per month' or 'Extra per year' below — the savings panel and the amortization schedule update instantly.
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| Year | Principal | Interest | Balance |
|---|
How extra payments save you money
Interest is charged on your remaining balance. Pay down that balance early and every future interest charge on the amount you prepaid disappears. On a $320,000 loan at 6.85%, the difference is dramatic.
| Extra per month | Interest saved | Time saved | New payoff |
|---|---|---|---|
| $0 | — | — | 30 yr 0 mo |
| +$100 | ~$62,000 | ~4 yr | ~26 yr |
| +$200 | ~$105,000 | ~6.5 yr | ~23.5 yr |
| +$500 | ~$190,000 | ~12 yr | ~18 yr |
These are estimates at one rate — your numbers depend on your balance, rate, and term, which is exactly what the calculator computes for your situation.
Monthly, annual, or a one-time lump sum?
All three help; the best choice depends on your cash flow:
- Extra each month is the most powerful because it attacks principal earliest and most consistently. Even $50–$100 is meaningful.
- One extra payment a year (for example, from a tax refund or bonus) is the simplest behaviorally and still cuts years off — the calculator's "Extra per year" field models this.
- A large lump sum early in the loan has outsized impact because there is so much remaining interest to cancel.
When paying extra makes sense — and when it doesn't
Pay off higher-interest debt first. If you carry credit-card or personal-loan debt at double-digit rates, that beats prepaying a 6–7% mortgage every time. Keep an emergency fund and capture any employer 401(k) match before accelerating the mortgage.
Prepaying makes the most sense when you have no higher-interest debt, a solid emergency fund, and you value guaranteed, risk-free savings. Mathematically, extra payments "earn" you your mortgage rate, tax-free — a strong, certain return. Just confirm your loan has no prepayment penalty (most modern mortgages don't) and that extra funds are applied to principal, not next month's payment.
Does paying extra lower my monthly payment?
No — extra principal shortens the term, not the required monthly amount. Your payment stays the same and you simply finish sooner. The exception is a recast: some lenders will re-amortize your loan after a large lump sum, lowering the monthly payment over the remaining term for a small fee.
Your mortgage rate is a guaranteed, tax-free return
It helps to reframe a prepayment as an investment. When you pay down a 6.85% mortgage, you "earn" 6.85% — guaranteed, with zero risk, because you're erasing interest you would otherwise owe for certain. Very few truly safe investments match that. A high-yield savings account or short-term Treasury might pay less, and while the stock market may average more over decades, it carries real risk and isn't guaranteed in any given year.
That's why the decision usually comes down to certainty and priorities: clear any higher-interest debt first, keep an emergency fund, capture your full 401(k) match, then weigh extra mortgage payments against additional investing. For many homeowners, the peace of mind from a guaranteed return and a shrinking balance is worth as much as the math.
Make sure every extra dollar actually counts
Extra payments only accelerate your loan if they're applied to principal. A few habits to protect that:
- Designate principal explicitly. Use your servicer's "extra principal" field online, or write "apply to principal" on a check. Otherwise the money may sit as a prepayment of your next scheduled payment, which doesn't reduce interest.
- Check the next statement. Confirm your principal balance dropped by the extra amount and that the servicer didn't advance your due date instead.
- Automate it. Setting up a recurring extra principal payment removes the willpower problem and keeps the acceleration consistent.
- Ask about a recast. If you make a large lump-sum payment and want a lower required monthly payment (rather than a shorter term), request a loan recast — your lender re-amortizes the smaller balance over the remaining years for a modest fee.
Frequently asked questions
- CFPB — Prepayment penalties — federal guidance on when a mortgage can charge a prepayment penalty.
- CFPB — Owning a home — official resource on managing and paying down a mortgage.
- IRS Publication 936 — Home Mortgage Interest — how mortgage interest is treated for tax purposes.
- FRED — 30-Year Fixed Mortgage Average — historical mortgage-rate series used for the worked examples.
Last reviewed: June 1, 2026. See our data sources and editorial methodology for how we research every article.