How to use this calculator
- Enter your Current loan balance and Interest rate.
- Enter the Years remaining on the loan.
- Enter an Extra payment per month you could add on top of the regular payment.
- Read Interest saved, Time saved and Paid off in, and compare interest with and without the extra.
Why extra payments work so well
On a fixed loan, interest each month is the balance times the monthly rate. An extra payment goes entirely to principal, so the balance is lower from that day on, and so is every future month's interest. The saving compounds: the earlier you pay, the more months of interest you remove.
B_k = B_(k−1) · (1 + r) − (M + E), repeated until B_k ≤ 0- B_k = balance after month k
- r = monthly interest rate (annual rate ÷ 12 ÷ 100)
- M = regular payment for the remaining term
- E = extra payment per month
The calculator first finds the regular payment for your remaining term, then simulates month by month with the extra amount added.
Example: $200,000 at 6.5% with 25 years left
The regular payment is $1,350.41 and the remaining interest is about $205,124. Adding $200 a month makes the payment $1,550.41. The loan is paid in 223 months instead of 300, 77 months sooner, and interest falls to $144,342: you save $60,783.
Put in $500 a month instead and the payoff comes in 164 months, 136 months early, with $103,494 of interest saved. More than doubling the extra does not just double the benefit, because the early months matter most.
A smaller loan, a smaller effect
Take an $18,000 balance at 8% with 6 years left. The regular payment is $315.60. An extra $100 a month ends the loan in 52 months, 20 months early, and saves $1,412 of interest. The savings are smaller because the balance and the time are smaller, but the gain in percentage terms is meaningful.
Use the loan calculator to see the starting cost, or the amortization calculator to view the month-by-month split.
Should you pay extra or do something else?
Paying extra is a guaranteed, risk-free return equal to the loan's interest rate. That makes it attractive for high-rate debt, and less so for a very low rate when you could earn more elsewhere, or when you lack an emergency fund. Clear card balances first with the credit card payoff calculator, since their rates are usually higher.
Also check whether you have a lower-rate option: refinancing may cut the rate, but closing costs must be recouped.
Practical tips
- Confirm that extra payments are applied to principal, not held for the next due date. Tell the lender in writing or use the payoff option.
- Check for prepayment penalties in your loan contract.
- Round up your payment, or make one extra payment per year, for an easy habit.
- Pay extra from windfalls such as bonuses or tax refunds if a monthly amount is hard.
Assumptions and limits
The calculator assumes a fixed rate, monthly interest and the same extra amount every month. It ignores prepayment penalties, escrow, fees and rate changes, and it does not model a one-time lump sum. The final payment is smaller than the others, which the tool handles by stopping when the balance reaches zero.
Your lender's payoff quote is the figure to use when you want to close the loan.
Frequently asked questions
How much interest will I save by paying extra on my mortgage?
It depends on the balance, rate and time left. On $200,000 at 6.5% with 25 years left, $200 extra a month saves about $60,800 and ends the loan 77 months early.
Is it better to make extra payments or invest?
Paying down debt gives a certain return equal to your rate, while investing has risk. Many people keep an emergency fund first, then pay off high-rate debt.
Do extra payments reduce my monthly payment?
Usually not. They shorten the term instead, unless the lender recasts the loan.
Will I be charged a penalty for paying early?
Some loans have prepayment penalties. Read your contract or ask the lender before paying large extra amounts.