What this calculator tells you
Enter your current balance, interest rate, remaining term, and how much extra principal you can add each month. The calculator builds two amortization schedules — one with your scheduled payment, one with the extra — and reports:
- Interest saved over the life of the loan
- How much sooner the loan is paid off
- Your new payoff date and remaining interest either way
Why extra principal is so powerful early on
A mortgage is front-loaded with interest. In the first years, most of your payment covers interest and only a small slice touches principal. An extra payment made in year 2 wipes out every future interest charge that dollar of principal would have generated for the next 28 years. The same extra payment made in year 25 saves only a few years of interest.
That’s why starting small and early usually beats waiting until you can afford a large amount. Adding $150 a month from the start of a $320,000 loan at 6.5% removes roughly four years and more than $60,000 in interest.
Three ways to accelerate payoff
- Fixed extra amount — add the same dollar figure to every payment. Simple and easy to automate.
- Round up — round the payment up to the next $100 or $500. Painless and surprisingly effective.
- Annual lump sum — apply a tax refund or bonus once a year. Use the amortization calculator to model one-time payments.
When not to prepay
- You’re carrying credit-card or other debt above your mortgage rate — clear that first with the debt snowball calculator.
- You don’t yet have 3–6 months of expenses saved.
- Your employer match or tax-advantaged retirement space isn’t maxed out.
- Your mortgage rate is low (say, under 4%) and you’re comfortable investing the difference for the long run.
A note on PMI
If you’re still paying private mortgage insurance, extra principal has a bonus effect: it gets you to 80% loan-to-value faster, at which point you can request PMI cancellation. The PMI removal calculator shows when you’ll hit that threshold.