Mortgage Extra Payment Calculator

How to calculate mortgage savings?

Extra payments go directly toward your principal balance, reducing the base upon which interest is calculated each month.

Formula Concept: Interest_Saved = (Original_Total_Interest - New_Total_Interest)

Using the extra payment calculator: an example

Example: A $300,000 loan at 6% interest with 25 years remaining and a $250 extra payment.

Step-by-step calculation:

• Identify original monthly principal and interest.
• Add the $250 extra payment to the monthly principal portion.
• Recalculate the amortization schedule based on the faster principal reduction.
• Compare the total interest paid across the shortened timeline.

Frequently Asked Questions

Should I pay extra or invest the money?

If your mortgage rate is lower than your expected after-tax investment return, investing may be better; otherwise, paying down debt is a guaranteed return.

Are there prepayment penalties?

Most modern residential mortgages do not have prepayment penalties, but you should verify with your lender before starting extra payments.

How often should I make extra payments?

Monthly extra payments are common, but even one-time lump sums or bi-weekly payments significantly reduce long-term interest.