Why Pay Extra on Your Mortgage?
Making extra payments on your mortgage principal is one of the safest guaranteed investments you can make. It directly reduces the balance on which interest is calculated, triggering a compounding effect in your favor.
The Power of $100
Even adding just $100 or $200 a month can simulate shaving years off a 30-year mortgage and saving tens of thousands of dollars in interest. This calculator helps you verify exactly how much you can save based on your specific interest rate.
Why Early Payments Matter So Much
In the early years of a mortgage, the vast majority of each payment goes toward interest, not principal — that's simply how amortization works. Extra payments made early attack the principal balance directly, and because every future month's interest is then calculated on a smaller number, the savings compound for the rest of the loan's life.
A Worked Example
Imagine 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 the 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.
A Note on Amortization
Extra payments don't lower your required monthly payment — they shorten the term instead. One easy strategy is making a single extra full payment each year (13 payments instead of 12), which can trim a 30-year mortgage down to roughly 25 years on its own.