Pay more, finish sooner
By paying a little more than your required monthly payment, you can finish your loan years earlier and save thousands in interest. The key is understanding the impact each extra dollar has. This calculator shows you exactly how much you can save across different scenarios.
How does it work?
In a standard fixed-payment loan, a large portion of each early payment is interest and very little is principal. When you pay more than required, the extra goes directly to the outstanding principal, which reduces the interest charged on all future months. The effect is cumulative.
Practical Example
For a $300,000 mortgage at 4% for 30 years (base payment ~$1,432/month):
- Paying $100 extra/month: saves ~$30,000 and finishes ~5 years early
- Paying $200 extra/month: saves ~$50,000 and finishes ~8 years early
- Paying $500 extra/month: saves ~$80,000 and finishes ~14 years early
Not sure whether to invest that extra money or pay down the mortgage? Use our Invest vs Pay Debt calculator to compare. You can use the schedule table built into this simulator to view your full amortization.
Frequently asked questions
Is it worth paying extra if I have a low interest rate?
It depends. If your loan rate is lower than what you'd earn investing that money, it might be better to invest. Use our Invest vs Pay Debt calculator to compare.
When does paying extra have the most impact?
At the start of the loan. In the early years, interest makes up most of each payment, so reducing the outstanding principal has a bigger ripple effect. That said, extra payments always save money regardless of when you make them.
Should I reduce the term or reduce the monthly payment?
Reducing the term saves more in total interest and gets you out of debt faster. Reducing the monthly payment improves your cash flow. If your situation is stable, reducing the term is usually the smarter financial choice.
Can I make early payments on any mortgage?
Most mortgages allow early payments, though some may have prepayment penalties. Check your loan contract or ask your lender before making extra payments.
How much difference does $100/month extra make?
On a $300,000 mortgage at 4% for 30 years, paying $100 extra per month saves over $30,000 in interest and pays off the loan about 5 years early. Use this calculator to see the exact impact.
Also see: Compound Interest · Invest vs Pay Debt