Extra Payment Calculator
An extra $200 a month does more for a 30-year mortgage than most refinances. Enter your balance and see exactly what extra principal buys you: months off the term, interest never charged, and a payoff date you can plan around.
With and without extra payments
| Scheduled | With extra | Difference | |
|---|---|---|---|
| Monthly payment | — | — | — |
| Payoff date | — | — | — |
| Total interest | — | — | — |
| Total paid | — | — | — |
Balance over time
- Scheduled payments
- With extra payments
Interest saved, year by year
| Year | Extra paid | Interest scheduled | Interest with extra | Saved this year | Balance |
|---|
Which extra payment strategy works best?
Every dollar of extra principal does the same thing: it removes future interest from the schedule. What changes is timing. A dollar paid in year three saves roughly twice as much interest as a dollar paid in year eighteen, because it stops compounding for fifteen more years.
Monthly extra — the default choice
Consistent, easy to automate, and it attacks the balance exactly when interest is most expensive. The calculator above defaults to this. Even $50 a month on a $350,000 loan at 6.75% removes about eighteen months from a 27-year term. The catch is that it only works if you actually leave it alone; most servicers will happily apply extra to next month's payment unless you designate it as principal.
Annual lump sum — for bonus income
A $5,000 payment made in January is worth more than the same $5,000 paid in December, because it saves eleven months of interest on the full amount. If your income is commission- or bonus-based, this is the strategy that fits without risking a cash-flow crunch.
Biweekly payments — automatic but oversold
Accelerated biweekly means paying half your monthly payment every two weeks. Because there are 26 fortnights in a year, you make 13 full payments instead of 12. The lender holds the half-payments and applies them monthly, so the effect is mathematically identical to adding one twelfth of your payment as extra principal each month — which is what the biweekly switch above does. Some servicers charge a setup fee for this; you can get the same result for free by adding the extra yourself.
Refinancing to a shorter term
Moving from a 30-year to a 15-year loan forces the higher payment and usually lowers the rate, but it also raises the required minimum and adds closing costs. If the discipline of an automatic extra payment is enough, you keep the flexibility to stop. Run both scenarios through the refinance calculator before paying for an appraisal.
Check your prepayment penalty first. Prepayment penalties are rare on conventional US mortgages but still common on some commercial, hard-money and non-QM loans — typically 1%–5% of the balance if you pay off within the first three years.
Extra payment FAQ
What servicers do with the money, and what they do not.
Does extra principal reduce my monthly payment?
No. On a fixed-rate mortgage the required payment stays the same until the loan is paid off; what changes is how fast the balance falls and when the final payment happens. To lower the required payment you need to recast (ask the servicer to re-amortize, usually for a fee) or refinance.
Is it better to pay extra monthly or in one lump sum?
Monthly is marginally better because each dollar starts saving interest sooner. A $6,000 lump sum paid today beats $500 a month for twelve months, but $500 a month beats a $6,000 payment at the end of the year. Use the lump sum only for money you would otherwise hold in a low-yield account.
Will my servicer apply extra money to principal automatically?
Not always. Under RESPA, servicers may hold up to $50 of an ambiguous extra payment in escrow, and many apply the rest to the next scheduled payment first. Write "principal only" in the memo field or use the servicer's dedicated principal payment option, then check that the balance on your next statement dropped by the full amount.
Should I pay extra or invest instead?
Compare the after-tax mortgage rate with the after-tax return you expect on the investment. Paying down a 6.75% mortgage is a guaranteed 6.75% return, which is hard to beat on a risk-adjusted basis. Investing wins if your expected return is higher and you value liquidity — home equity is expensive to access and does not help in a job loss.
Does paying extra hurt my credit score?
No. Prepaying principal does not lower your score, though a fully paid-off installment loan eventually drops off your report, which can reduce credit mix slightly. The effect is small and usually temporary.
What happens if I pay extra and then can't afford it?
You can stop at any time. Extra principal is voluntary, and skipping it does not put you in default as long as the scheduled payment is made. This reversibility is the main argument for extra payments over a shorter-term refinance.
Related calculators
Work out the rest of the picture.
Estimates assume a fixed rate, no prepayment penalty and extra payments applied directly to principal. Actual savings depend on your servicer's payment application rules and the date each extra payment posts.