A 30-year mortgage at 6% costs $347,515 in interest on a $300,000 loan — nearly as much as the loan itself. But that number is not fixed. Every dollar of extra principal you pay today eliminates the compound interest it would have generated for all the remaining months.
The calculator above is pre-filled with a $200/month extra payment, which — verified against the engine — cuts the payoff from 360 months to 279 months (saving 81 months, or 6 years 9 months) and reduces total interest from $347,515 to $256,341, saving $91,173.
Why extra payments have outsized impact early
In a standard amortization schedule, interest is charged on the outstanding balance each month. On a new $300,000 / 6% mortgage, month one interest is $300,000 × 0.5% = $1,500. Only $298.65 of your $1,798.65 payment goes to principal. By month 12, you have paid $21,583.80 in payments and reduced your balance by only about $3,600.
When you pay extra principal, you eliminate all future interest on that exact amount. A $200 extra payment in month one does not just save $200 — it saves $200 plus all the interest that $200 would have accrued for the remaining 359 periods. That compound effect is why small extra amounts produce large savings.
The savings are front-loaded: $200 extra in year one saves far more than $200 extra in year 20, because the remaining loan life in year one is much longer. The calculator shows the exact payoff date and interest saved for any extra amount you enter.
Lump sum vs monthly extra: which is more powerful?
A lump sum applied at month one beats an equivalent spread-out monthly addition on a dollar-for-dollar basis, because the full amount reduces the balance immediately. A $7,200 lump sum ($200 × 36 months of savings) applied at closing saves more than $200/month for 36 months, because the lump sum eliminates interest from day one rather than gradually.
In practice, most people do not have a large lump sum available at closing. The monthly extra is more realistic and still produces dramatic savings. Use the calculator's lump sum field to add a one-time extra payment — from a tax refund, bonus, or inheritance — and see the combined effect alongside your regular extra monthly payment.
Accelerated biweekly payments: how they work
An accelerated biweekly schedule splits your monthly payment in half and pays that amount every two weeks. Because there are 52 weeks in a year, you make 26 half-payments — equivalent to 13 monthly payments instead of 12. That one extra payment per year, applied entirely to principal, shortens a 30-year mortgage to roughly 25–26 years on most common rate/balance combinations.
Switch to the standard amortization mode and then back to payoff to compare: add the biweekly equivalent as an extra monthly amount (1/12 of a full monthly payment). On a $1,798.65 monthly payment, that is about $149.89 extra per month — less impactful than $200/month but requiring no active effort if set up as an automatic payment.
Frequently asked questions
How much do extra mortgage payments really save?
On a $300,000, 30-year mortgage at 6%, adding $200/month saves exactly $91,173 in interest and pays off the mortgage 81 months (6 years 9 months) early — verified against the engine. The exact savings depend on your balance, rate, and when in the loan term you start. Enter your actual numbers in the calculator above.
Does my mortgage allow extra payments without penalty?
Most US, Canadian, and Australian mortgages allow unlimited extra payments without prepayment penalties. UK mortgages typically allow overpayments of up to 10% of the outstanding balance per year without an early repayment charge (ERC). Fixed-rate mortgages in the UK during the fixed period may impose ERCs above that threshold. Check your mortgage agreement before making large lump-sum payments.
Should I pay extra on my mortgage or invest the money?
This is a risk-tolerance question, not a pure math question. Paying extra on a 6% mortgage gives a guaranteed 6% after-tax return (by avoiding that interest). Investing the same money in index funds has averaged roughly 7% per year after inflation historically — but with significant volatility and no guarantee. If you have high-interest debt, pay that first. If your mortgage rate is above 5–6%, paying extra is very competitive with investment returns. Below that, the math increasingly favors investing.
How do I make an extra mortgage payment?
Contact your lender or log into your mortgage servicer's online portal. When making an extra payment, specifically designate it as "principal only" — otherwise some servicers apply it to next month's payment instead of reducing your balance. Set up automatic extra payments if available; this removes the behavioral friction of making a manual decision each month.