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Mortgage Payoff Calculator
See how much sooner you can own your home outright, and how much interest you save, by paying extra each month, each year or once.
Why extra payments work so well
Every extra dollar goes straight to principal. That lowers the balance that next month's interest is charged on, so more of every future payment also goes to principal. The effect snowballs, which is why small extra amounts early in the loan save so much.
Example: $320,000 at 6.5%
The regular payment is $2,022.62 a month, and over 30 years you would pay about $408,142 in interest. Adding $200 a month pays the loan off in 23 years and 5 months, 6 years and 7 months early, and saves about $105,429 of interest.
Ways to pay extra
- Round up your payment, for example from $2,022 to $2,200.
- One extra payment a year, such as from a tax refund or bonus.
- Biweekly payments, which add up to 13 payments a year.
- Lump sums from an inheritance or sale. Some lenders will also "recast" the loan after a big lump sum to lower your monthly payment.
Always mark extra payments as "principal only" and check your loan has no prepayment penalty (rare on modern US home loans, but worth confirming).
Frequently asked questions
How much does $200 extra a month save on a mortgage?
On a $320,000 loan at 6.5% for 30 years, $200 extra each month pays it off 6 years and 7 months early and saves about $105,000 in interest.
Is it better to pay extra on the mortgage or invest?
Paying extra earns a guaranteed return equal to your mortgage rate. Investing may earn more over time but with risk. Many people do both, after taking any 401(k) match and building an emergency fund.
Do biweekly payments help?
Paying half your payment every two weeks makes 26 half-payments, which equals 13 full payments a year instead of 12. That one extra payment a year takes about 5 to 6 years off a typical 30-year loan. Check that your lender applies it to principal and doesn't charge a fee.