Extra Payment Calculator
See how making extra payments on your loan saves time and money. Calculate the impact of paying more than required.
Adding $100 a month to a $200,000 mortgage at 6% cuts the term from 30 years to 24 years 7 months and saves $49,138 in interest — and the same $100 is worth progressively more the earlier you start.
Calculator
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How This Calculator Works
Extra payments go directly toward principal, reducing the balance faster. This shortens the loan term and reduces total interest paid.
Worked example
Using the defaults — a $200,000 loan at 6% over 30 years, with an extra $100 a month:
Establish the required payment. At 6% over 360 months the contractual payment is $1,199, and the total interest over the full term is $231,676.
Add the extra. Paying $1,299 instead of $1,199 sends the entire $100 straight to principal. Because interest is charged on the outstanding balance, every dollar of extra principal removes all the future interest that dollar would have generated.
Follow the balance down. The loan is repaid in 295 months — 24 years 7 months — instead of 360. You save 65 payments.
Total the saving. Interest paid falls from $231,676 to $182,538. The difference is $49,138 — a return of roughly $491 for every $100 of extra payment… except you only paid about $6,500 extra, so the actual return on those extra dollars is far higher than the headline suggests.
Enter 200000, 6, 30 and 100 above to reproduce the 24 yr 7 mo result. The calculation assumes every extra payment is applied to principal and that there is no prepayment penalty.
What each extra amount actually buys
The relationship between the extra payment and the time saved is not linear, because each extra dollar reduces the balance that later dollars accrue interest on.
| Extra per month | New payment | Term | Time saved | Total interest | Interest saved |
|---|---|---|---|---|---|
| $0 (baseline) | $1,199 | 30 yr | — | $231,676 | — |
| $50 | $1,249 | 27 yr | 3 yr | $207,884 | $23,792 |
| $100 (default) | $1,299 | 24 yr 7 mo | 5 yr 5 mo | $182,538 | $49,138 |
| $200 | $1,399 | 21 yr | 9 yr | $158,241 | $73,435 |
| $400 | $1,599 | 16 yr 5 mo | 13 yr 7 mo | $112,907 | $118,769 |
Figures computed by simulating the amortisation month by month with the extra amount applied to principal. Doubling the extra from $100 to $200 adds roughly three and a half years to the time saved, not double, because the interest rate compounds on a shrinking balance.
Common mistakes with this calculation
- Assuming the lender applies extra payments to principal automatically. Many servicers apply extra money to the next scheduled payment instead, which does nothing to shorten the term — it just prepays a bill you already owed. You must specify in writing that the extra is to be applied to principal, and check the next statement to confirm it happened.
- Making extra payments while carrying higher-rate debt. Paying down a 6% mortgage while a 22% credit card balance sits there costs you 16 percentage points a year. Clear the highest-rate debt first; the mortgage will still be there, and it is usually the cheapest money you will ever borrow.
- Forgetting the emergency fund. Money paid into a mortgage is illiquid. It reduces your debt, but you cannot get it back without a HELOC, a cash-out refinance, or selling the house. Build three to six months of expenses in cash before accelerating a mortgage.
- Ignoring the tax deduction. If you itemise, mortgage interest is deductible, which lowers the effective cost of the mortgage below the headline rate. That makes the after-tax return on an extra payment worse than the 6% figure suggests. Most filers now take the standard deduction, in which case this does not apply.
When this calculator does not apply
- The calculator assumes a fixed rate for the entire term. A variable-rate loan has a payment that changes, and the model cannot represent that.
- It excludes escrow: property tax, insurance and PMI are collected monthly but do not reduce the balance, so your real outgoing payment is higher than shown.
- It assumes extra payments begin in month one. An extra payment started in year ten produces a materially smaller saving than the same amount started immediately.
- It does not model the opportunity cost. Money used to pay down a 6% loan is not available to earn a possibly higher return elsewhere, though on a risk-adjusted basis the 6% is a guaranteed return.
- A prepayment penalty on some loans can offset part or all of the saving. Check the note before assuming the full figure.
Frequently Asked Questions
Is it worth making extra payments?
If your loan rate is higher than your investment return, yes. A $100 extra payment on a 6% mortgage saves $100 × 6% = $6/year in interest. Over 30 years, that compounds significantly.
Will lenders charge for extra payments?
Most mortgages allow extra payments without penalty. Some loans have prepayment penalties - check your loan agreement.
Sources & Methodology
This calculator uses standard financial formulas. See our methodology page for the full formula derivation.
- Loan Options and Mortgage Costs Consumer Financial Protection Bureau
- Mortgage Interest Deduction Internal Revenue Service
- What Is a Mortgage? Consumer Financial Protection Bureau
- Housing Finance Data Federal Reserve
- Consumer Handbook on Adjustable-Rate Mortgages Consumer Financial Protection Bureau
Last reviewed .
Key takeaways
- $100 a month extra on a $200,000 loan at 6% saves $49,138 and finishes the loan 5 years 5 months early.
- Extra principal produces a non-linear return: $400 extra saves more than four times what $100 extra saves.
- The payment must be designated for principal, or the servicer may just prepay your next installment.
- Never accelerate a 6% mortgage while carrying higher-rate consumer debt.
- Mortgage overpayments are illiquid. Keep an emergency fund before shortening the term.