Discover how much interest you can save — and how many years earlier you can own your home — by making extra monthly payments toward your mortgage principal.
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| Scenario | Monthly Payment | Payoff Date | Total Interest |
|---|---|---|---|
| Without extra payments | — | — | — |
| With extra payments | — | — | — |
Every monthly mortgage payment is split between interest (the lender's charge for the money you owe) and principal (the actual balance you're paying down). In the early years, most of each payment goes to interest, because interest is charged on a still-large balance. That's why overpaying early has an outsized effect.
When you pay extra, the full amount comes straight off your principal. A smaller balance means less interest is charged every month after that — and because the effect compounds month after month, even a modest, consistent overpayment can shave years off your term and save a large chunk of total interest. This calculator compares your normal schedule against the same loan with your extra payment added, so you can see the interest saved and the new payoff date.
Estimates only, and not financial advice. Results assume a fixed interest rate and don't account for early-repayment charges — always check your mortgage agreement before overpaying.
It depends on your balance, rate, and how much extra you pay — but the savings are usually larger than people expect, because the interest you avoid compounds over the remaining term. On a typical 25–30 year mortgage, an extra $100–$200 a month can save tens of thousands in interest and cut several years off the term. Enter your numbers above to see your specific figure.
A useful rule of thumb: overpaying "earns" you a guaranteed, tax-free return equal to your mortgage interest rate. If your rate is higher than what you'd reliably earn after tax by investing, overpaying often wins — and it's risk-free. If your rate is low and you're comfortable with market risk, investing may come out ahead. Many people do a mix.
Not always. Many mortgages allow a certain amount of penalty-free overpayment each year (commonly up to 10% of the balance), but exceeding that — or overpaying during a fixed-rate deal — can trigger an early-repayment charge. Check your mortgage terms before making large overpayments.
Because interest is charged on your outstanding balance. Early on, the balance is at its largest, so the most interest is being charged — reducing the balance now avoids all the future interest that would have accrued on that amount. The same overpayment made years later has less time left to compound, so it saves less.
Both reduce total interest, but they work differently. Formally shortening the term locks in a higher required monthly payment. Regular overpayments give you the same benefit while keeping flexibility — you can pause them if money is tight. If you value certainty and discipline, a shorter term works; if you value flexibility, overpaying does.