Step-by-Step Calculation
- Start with your current loan balance, rate, and remaining term.
- Decide on a monthly extra payment amount.
- Recalculate the amortization schedule applying the extra amount to principal each month.
- Find the month where the balance reaches zero — that's your new payoff date.
Worked Example
You have a $250,000 mortgage at 6% with 25 years remaining, and a standard payment of about $1,610/month.
Adding just $200/month extra toward principal cuts your payoff time from 25 years down to roughly 19.5 years — saving over 5 years and approximately $65,000 in interest over the life of the loan.
Frequently Asked Questions
Is it better to make extra payments or invest that money?
It depends on your mortgage rate versus expected investment returns — if your mortgage is 4% and the stock market historically returns 7-10%, investing may build more wealth, though paying down debt carries less risk.
Do extra payments reduce my monthly bill?
No — your required monthly payment stays the same; extra payments simply shorten the loan term and reduce total interest paid.
