Simulation

How Extra Mortgage Payments Save Interest and Time

On a $300,000 loan at 7% over 30 years, adding $200 a month pays it off about 5 years early and saves roughly $94,000 in interest. The effect is front-loaded because extra principal immediately stops accruing interest. Use the slider to find the extra payment that fits your budget; even $50 helps. A one-time lump sum at the start compounds those savings from day one.

Results

Visualization

RateFig provides estimates for educational purposes only. Mortgage and loan figures depend on your credit, fees, points, and individual lender terms. This is not financial advice. Confirm every number with a qualified loan officer before making a decision.

How It Works

We simulate month by month. Each month, interest charges the current balance at the monthly rate, and the rest of your payment (base plus extra, minus the one-time lump sum applied first) reduces principal. Because the balance falls faster, later months accrue less interest, so the loan ends early. Standard interest is the base payment times 360 minus principal; the saving is the difference. The chart tracks the balance under both plans so you can see the gap widen.

What Should You Do?

Direct extra payments to principal, not future escrow, and confirm there is no prepayment penalty. Biweekly payments (26 half-payments a year) mimic an extra monthly payment and are an easy habit. Apply raises or tax refunds as one-time lumps for a big early hit. Keep the extra affordable — it is better to pay a steady, sustainable amount than to overcommit and stop.

Frequently Asked Questions

Should the extra go to principal?

Yes, specify it as a principal reduction. Otherwise the lender may treat it as a prepaid future payment, which saves little.

Is one-time or monthly better?

A one-time lump early saves the most because it stops interest on that principal for the whole term; monthly is easier to sustain.

What if my budget is tight?

Even $25-50 a month shortens the loan and cuts interest. Consistency matters more than amount.

Does this beat investing the extra?

The saved interest is a guaranteed return equal to your mortgage rate after tax. Compare with your after-tax investment return.

Will my payment change?

No, your required payment stays the same; you simply send more. The loan just ends sooner.

Can I use this for other loans?

Yes, any fixed amortizing loan works; just enter its balance, rate, and term.