A worked example
A $250,000 balance at 6.5% with 25 years left would normally cost about $256,400 in remaining interest. Adding just $300 extra a month cuts that to roughly $170,700 — a savings of about $85,700 — and finishes the loan about 7 years 4 months early.
Frequently asked questions
Why does a relatively small extra payment save so much interest?
Extra payments go straight to principal, which reduces the balance interest is calculated on for every remaining month of the loan — the savings compound over the years left, which is why the effect looks disproportionate to the extra amount on its own.
Is it better to make one extra payment a year, or add a bit extra every month?
Mathematically, paying the same total extra amount sooner saves more, since it reduces the balance earlier rather than later. Spreading it monthly versus one annual lump sum makes only a small difference — what matters most is the total extra paid and how early it happens.
Should I pay extra on my mortgage or invest the money instead?
It depends on your mortgage rate versus realistic investment returns, plus how much you value the certainty of guaranteed interest savings versus market-dependent growth. There's no universally correct answer — it's a genuine trade-off between a guaranteed return and a variable one.
Do I need to tell my lender I'm paying extra?
Most lenders apply extra amounts to principal automatically, but it's worth confirming — some require you to specifically designate the extra portion, or it may default to being applied toward your next payment instead of principal.
This calculator provides estimates for general informational purposes only and is not financial advice. Confirm with your lender that extra payments are applied to principal and that no prepayment penalty applies.