Short answer: extra principal is the closest thing to a guaranteed return in personal finance — every extra dollar removes a dollar of balance that would have been charged interest for years. On the prefilled loan ($280,000 at 6% with 25 years left), adding $200 a month makes you mortgage-free 59 months sooner and saves $59,331 of interest. This calculator shows both payoff paths side-by-side — months saved, interest saved, and the balance curves — plus what a one-time lump sum (a bonus, an inheritance) does on its own.
| Your required monthly payment (principal & interest) | $0 |
| Payoff on the current path | — |
| Interest on the current path | $0 |
| Payoff with the extra principal | — |
| Interest with the extra principal | $0 |
| Time cut from the loan | — |
See year-by-year balances for both paths
| Year | Balance — current path | Balance — with extra |
|---|
Educational estimate only — not financial advice. Your required payment is calculated from the balance, rate, and years left you enter (the standard amortization formula); if your actual payment differs, the schedule shifts slightly. Extra amounts are assumed applied to principal every month, and the lump sum immediately. Tell your servicer to apply extra payments to principal — and check whether your loan has a prepayment penalty (not all mortgages have one; your loan documents or servicer can tell you). Your numbers never leave your browser.
How this calculator works
Your required payment is first calculated from the balance, rate, and years remaining using the standard amortization formula — the same payment your servicer computes. Then two month-by-month simulations run:
- Current path: the required payment only, until the balance reaches zero.
- Extra-principal path: the required payment plus your extra amount every month (and your lump sum, applied immediately), until zero.
Interest each month is balance × (rate ÷ 12); everything above the interest cuts principal. Because mortgage interest is front-loaded — most of your early payments are interest — extra principal in the early years removes the most future interest. The chart makes that visible: the two balance curves separate slowly at first, then dramatically.
One honest assumption to know: if your actual payment differs from the calculated one (some loans have fixed payments set at origination), use our Mortgage Calculator to reconcile, or treat these results as very close estimates.
The worked example
Balance $280,000 · 6% · 25 years left · required payment $1,804.04/month.
| Current path | + $200/month extra | |
|---|---|---|
| Payoff | 300 months | 241 months |
| Total interest | $261,213 | $201,882 |
| Difference | — | 59 months sooner, $59,331 saved |
And the lump-sum variant, on a smaller loan: $90,000 at 5% with 10 years left — adding $500/month plus a $10,000 lump sum pays it off in 63 months instead of 120, saving $13,499 of interest. Note what the zero case proves, too: set the extra to $0 and both paths are identical, dollar for dollar — the calculator isn’t inflating anything.
FAQs
Is paying extra on my mortgage always a good idea? Not automatically — sequence matters. Usual order of operations: keep a starter emergency fund, capture the full employer 401(k) match (an instant 100% return beats any mortgage rate), clear high-interest debt, then extra mortgage principal. This calculator tells you the size of the prize; the order is about what else the money could do.
Should I pay extra monthly or save up a lump sum? Monthly wins, slightly: money applied in month 3 stops accruing interest from month 3. The difference is modest, though — the lump-sum field lets you compare your real options rather than argue theory.
Do I need to tell my servicer anything? Yes — mark extra amounts “apply to principal.” Most online payment portals have a principal-only field. And confirm whether your loan has a prepayment penalty. Not all mortgages have one, and where one exists it usually applies only in the first few years of the loan.
Pay extra or invest the difference instead? The honest framing: extra principal earns a guaranteed return equal to your mortgage rate. Investing might beat it and might not, with risk. Many households split the difference. What this calculator guarantees is the number on the mortgage side of that comparison.
Educational content only — not financial advice. Estimates assume extra amounts are applied to principal monthly; servicer practices vary. Your numbers never leave your browser.
Sources: CFPB: what is a prepayment penalty?, CFPB: how does paying down a mortgage work? Figures last verified Report a wrong number