Extra Payment Calculator

On a $350,000 30-year mortgage at 6.5%, one extra payment per year (split monthly, ~$290/month extra) saves roughly $90,000-$100,000 in interest and pays the loan off 5-6 years early. The higher your rate, the bigger the savings — extra principal effectively earns a guaranteed return equal to your rate.

Extra payments give a guaranteed, risk-free return equal to your mortgage rate. Long-run market returns are higher on average but volatile. A common rule: max tax-advantaged retirement matches first, then split surplus between investing and the mortgage. Above ~6% rate, extra payments are very competitive.

They should go 100% to principal — but only if designated. After your scheduled payment, mark the extra as a "principal-only" payment in the servicer portal or memo line. Otherwise it may be credited as an early next payment, which mostly prepay interest and saves far less.

A single large principal payment from a bonus, inheritance, or refund. On $350,000 at 6.5%, a $10,000 lump sum in year 2 saves about $30,000 in interest and cuts roughly 2 years off the term. You can also recast the loan afterward to lower the monthly payment instead.

Paying extra shortens your term but keeps the same required monthly payment. Recasting pays a lump sum and re-amortizes the loan, lowering the required monthly payment but keeping the original end date. Extra payments save more interest; recasting improves monthly cash flow.