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How Extra Payments Shorten a Mortgage
Every extra dollar you pay toward your mortgage goes entirely toward principal, since your required interest for that month is already covered by the regular payment. A smaller principal balance means less interest accrues every month going forward — which compounds into meaningfully shorter payoff times and large interest savings, even from relatively modest extra payments.
Worked Example
Example: $300,000 loan, 6.5% rate, 30-year term, $200/month extra
| Standard | With $200/mo extra | |
|---|---|---|
| Payoff time | 30 years | ≈ 23.1 years |
| Total interest paid | $382,633 | ≈ $279,185 |
That's roughly 6.9 years shaved off the loan and about $103,449 saved in interest — from an extra payment that's a small fraction of the original monthly payment.
Why the Early Years Matter Most
Extra payments made early in a loan have an outsized effect, because they reduce the balance while the largest share of the loan's total lifetime interest is still ahead of you. The same extra payment made in the final years of a loan has a much smaller effect, since less interest remains to be saved.
Is paying extra always the best use of that money?
Not necessarily for everyone — it depends on factors like your loan's interest rate compared to other financial goals, whether you have higher-interest debt elsewhere, and your own priorities. This calculator shows the mathematical effect; it isn't a recommendation for your specific situation.
What's the difference between a lump sum and recurring extra payments?
Both reduce principal and save interest, but a recurring extra payment compounds that benefit every single month going forward, while a one-time lump sum only reduces the balance once. This calculator models a consistent extra payment made every month.
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