Mortgage & Housing

Should I Pay Extra on My Mortgage?

See exactly how much interest you can avoid paying.

Loan Details

$
%
$

Year 1 = start from month 1. Year 5 = start at the beginning of year 5.

Extra Payment Strategy

Save$116,387in interest and pay off 6 yr 4 mo sooner

Total Interest (Standard)

$471,426

Total Interest (With Extra)

$355,039

Standard Payoff Time

30 yr 1 mo

New Payoff Time

23 yr 9 mo

Balance Over Time

Standard pace
With extra payment

Estimates based on your inputs. Actual results may vary. Terms →

What to calculate next

Mortgage Payoff

See exactly how to become mortgage-free years sooner.

Should I Refinance?

Compare your current rate with a new loan and find your break-even point.

Rent vs Buy

Find out if buying a house makes more financial sense than renting.

Where your savings come from

Every extra dollar you pay goes directly to principal. This reduces the balance that interest is calculated on - every month, for the rest of the loan.

High Interest Balance
→
Accelerated Principal Reduction

Best ways to reduce mortgage interest

Monthly extra

Small amounts, compounding effect over time

Annual lump sum

Tax return or bonus - one payment, years of savings

Refinancing →

If rates dropped 1%+, may beat extra payments

Extra payment vs. investing - which wins?

Extra Payment

Guaranteed return = your mortgage rate

If your rate is 6.5%, extra payment = guaranteed 6.5% return

Investing

Historical S&P ~7-10% average, but not guaranteed

Market volatility means short-term risk, long-term reward

Bottom line

Rate > 5%: extra payments often win
Rate < 4%: investing likely wins
Between 4-5%: personal preference

Frequently Asked Questions

Does paying extra on mortgage reduce monthly payment?

No - extra payments reduce your loan balance and total interest paid, and shorten your loan term. Your required monthly payment stays the same unless you recast the loan.

How much do I save paying $500 extra a month?

On a $400,000 mortgage at 7%, paying $500 extra per month saves approximately $109,000 in interest and cuts the loan term by nearly 9 years.

Is it better to pay extra on mortgage or invest?

It depends on your mortgage rate vs expected investment returns. If your rate is above 6-7%, paying down the mortgage often wins on a risk-adjusted basis. Below that, investing in index funds may yield more over time.

This tool helps you compare scenarios and understand trade-offs. Your actual results depend on your loan terms, payment timing, and lender policies.