Pay Off Mortgage Faster Calculator – Extra Payment Savings
Calculate savings from extra mortgage payments
Table of Contents
How to Use
- Enter your current mortgage balance
- Enter your annual interest rate
- Enter your current monthly payment
- Enter the extra amount you want to pay each month
- Click calculate to see your savings
How Extra Mortgage Payments Work
When you make extra payments on your mortgage, the additional amount goes directly toward reducing your principal balance. This means you'll pay less interest over the life of the loan since interest is calculated on the remaining balance.
Even small extra payments can make a significant difference over time. An extra $100 per month on a 30-year mortgage can save tens of thousands of dollars in interest and shave years off your loan.
Strategies for Paying Off Your Mortgage Faster
- Make bi-weekly payments instead of monthly (results in one extra payment per year)
- Round up your payment to the nearest $100
- Apply tax refunds or bonuses to your principal
- Refinance to a shorter term loan
- Make one extra payment per year
- Pay extra when you get a raise
Before Making Extra Payments
While paying off your mortgage early can save money, consider these factors:
- Check for prepayment penalties in your loan agreement
- Ensure you have an adequate emergency fund first
- Pay off higher-interest debt before extra mortgage payments
- Consider if investing the money might yield higher returns
- Maintain retirement contributions before accelerating mortgage payoff
Frequently Asked Questions
- Is it better to pay extra on principal or make extra payments?
- They're the same thing when done correctly. Ensure your lender applies extra payments to principal, not future payments. Specify 'apply to principal' when making extra payments.
- How much can I save with an extra $200 per month?
- On a $300,000 mortgage at 6% interest, an extra $200/month could save over $80,000 in interest and pay off your loan about 8 years early. Use this calculator with your specific numbers.
- Should I pay off my mortgage or invest?
- It depends on your interest rate and expected investment returns. If your mortgage rate is 4% and you expect 7% returns, investing may be better mathematically. However, the guaranteed 'return' of paying off debt has value too.
- Are there penalties for paying off a mortgage early?
- Some loans have prepayment penalties, especially in the first few years. Check your loan documents or contact your lender. Most conventional loans today don't have prepayment penalties.