How extra mortgage payments work
Your required monthly payment is split between interest (the cost of borrowing) and principal (paying down what you owe). Early on, most of each payment is interest. When you pay extra, that extra goes entirely to principal — shrinking the balance, which means less interest accrues next month, so even more of your normal payment attacks the principal. That snowball is why a small extra amount can cut years off the loan.
The math
The required monthly payment on a fixed-rate mortgage is:
where P is the balance, r the monthly rate (annual ÷ 12) and n the number of months. This calculator simulates the loan month by month — adding your extra payment to principal — to find the new payoff date and the interest you avoid.
Related
Wondering whether to overpay the mortgage or save instead? Try the compound interest calculator to compare, or the loan payoff calculator for any other loan. Deciding whether to buy at all? See the rent vs buy calculator. New to interest compounding? Read how compound interest works.
Frequently asked questions
- How do extra payments pay off a mortgage faster?
- Extra money goes straight to principal, so less interest accrues each month and the loan ends sooner.
- How much interest can extra payments save?
- Often tens of thousands over a 30-year loan — enter your numbers above to see your exact savings.
- Should I pay extra or invest?
- Overpaying is a guaranteed return equal to your rate; investing is higher-potential but uncertain.
- Is this calculator free?
- Yes, free, no sign-up, runs entirely in your browser.