Every extra dollar you send toward principal stops accruing interest for the entire remaining life of the loan. On a $240,000 balance at 6.25%, adding $250 a month plus one $5,000 lump sum pays the mortgage off 122 months early and saves $115,913.35 in interest. Enter your own balance and rate above to see what your extra payment is worth.
Why early extra payments punch above their weight
A mortgage amortizes, which is a polite way of saying the bank front-loads its interest. In the early years of a loan, the balance is at its largest, so the majority of each payment is interest and only a sliver reduces what you owe. On the example loan below — $240,000 at 6.25% — the first payment sends $1,250 to interest and just $228 to principal. The bank earns its money years before you earn much equity.
Extra principal payments reverse that leverage. Interest is computed on the remaining balance, so every dollar of principal you remove early is a dollar that never gets charged interest again — not this month, but every month for the rest of the loan. A $250 extra payment in month one doesn't save you $250 of interest; over a loan with decades left, it saves several times that. That's why the timing matters as much as the amount: the same $5,000 lump sum applied in year one is worth far more than in year twenty, because it has twenty-nine more years of interest to prevent.
This is also why small, boring, automatic extras beat heroic occasional ones. Two hundred fifty dollars a month is unglamorous. It is also, on the example loan, worth more than a hundred thousand dollars and a decade of payments. Consistency is the strategy; the calculator just shows you its size.
How the calculation works
- Baseline: the calculator simulates your loan month by month at your current payment — each month, interest accrues on the remaining balance (balance × annual rate ÷ 12), the payment covers interest first, and the rest reduces principal — until the balance reaches zero.
- Extra scenario: the same simulation with your extra monthly amount added to every payment, and your lump sum added in the month you specify. In the final month, the payment is trimmed to exactly what's owed, so you never overpay.
- Comparison: months saved is the difference in payoff times; interest saved is the difference in total interest. The payoff dates count forward from the current month.
If you don't know your principal-and-interest payment, leave that field empty and enter your remaining term instead — the calculator derives the amortizing payment from your balance, rate, and term. And a boundary worth knowing: if your payment doesn't cover the monthly interest, the loan never pays off at that payment (this happens with some interest-only and negative-amortization structures), and the calculator will tell you so instead of inventing a date.
Worked example
A homeowner owes $240,000 at 6.25%, paying $1,478/month in principal and interest. They add $250/month extra, plus a $5,000 lump sum in month 12:
- Original plan: 360 months (30 years), $291,786.25 total interest, $531,786.25 total paid
- With extras: 238 months (19 years, 10 months), $175,872.90 total interest, $415,872.90 total paid
- Saved: 122 months — over ten years — and $115,913.35 in interest
Look at where the savings come from: the homeowner sends about $64,500 in extra principal over the life of the plan ($250 × 238 months + the $5,000 lump), and it eliminates $115,913 of interest — nearly $1.80 of interest avoided for every $1 of extra principal, because those dollars were removed early, while the balance was still big. The default numbers in the calculator above are exactly this example, so you can reproduce every figure before changing a single input.
The one operational detail that decides everything
None of this math happens unless your servicer applies the extra money to principal. Most do when you use the "additional principal" field in their payment portal — but some apply stray overpayments to next month's bill, which advances your due date and saves you almost nothing. Send the first extra payment, then check the next statement: your balance should have dropped by your regular principal portion plus the full extra amount. If it didn't, call the servicer and have the payment re-applied. Ten minutes of verification is the difference between this calculator being a plan and being a fantasy.