How this calculator works
Your mortgage interest is recalculated every month on whatever balance remains. This tool builds two full amortization schedules side by side: one where you pay only the required principal-and-interest payment, and one where you add your extra monthly amount (plus any lump sum applied today). The difference between the two schedules is your true saving — no estimates, just month-by-month math.
Why small extra payments have outsized effects
Every extra dollar goes straight to principal. That shrinks next month's interest charge, which means more of your regular payment also goes to principal — a snowball that compounds for the rest of the loan. On a $300,000 loan at 6.5% over 30 years, an extra $200/month saves over $103,000 in interest and pays the loan off almost seven years early.
Lump sum vs. monthly extras
A lump sum applied today saves more per dollar than the same amount dripped in over years, because the balance drops immediately. If you have both options — say a bonus plus room in your monthly budget — model them together above; the effects stack.
What is APR?
APR (Annual Percentage Rate) is the yearly cost of your loan expressed as a percentage. Your interest rate is what the lender charges on the balance; APR adds in loan fees like origination charges and points, so it's always equal to or slightly higher than the interest rate. APR is useful for comparing loan offers apples-to-apples. For payoff math, use your note rate (the interest rate on your statement) in this calculator — that's what actually accrues on your balance each month.
What is PMI?
PMI (Private Mortgage Insurance) is a monthly fee lenders charge when your down payment is under 20% — typically 0.3%–1.5% of the loan amount per year. It protects the lender, not you. The good news: once your balance falls to 80% of the home's original value, you can request PMI cancellation (it drops automatically at 78%). Extra payments get you to that threshold faster, so on top of the interest savings shown above, prepaying can eliminate hundreds of dollars a year in PMI — a bonus this calculator doesn't include in its totals.
Things to check with your lender
Make sure extra amounts are applied to principal, not held as a prepayment of next month's bill, and confirm there's no prepayment penalty (rare on modern US loans, but worth a call). If your loan has PMI, reaching 80% loan-to-value faster can also let you cancel it early — a second layer of savings this calculator doesn't even count.
Frequently asked questions
Is it worth paying extra instead of investing? Paying down a 6.5% mortgage is a guaranteed 6.5% return. Investing might earn more over long periods, but with risk. Many people split the difference. This is a math tool, not financial advice — talk to a professional for your situation.
Does the calculator include taxes and insurance? No — escrow items don't affect payoff math. It models principal and interest only.
Can I model biweekly payments? Yes — switch the payment frequency to "Biweekly." You'll pay half your monthly payment every two weeks, which works out to 26 half-payments (13 full payments) per year. That one extra payment per year alone typically shaves 4–6 years off a 30-year loan, and you can stack extra amounts and lump sums on top.