How it works
This calculator takes a mortgage you're already paying down and asks one focused question: if you send extra money toward principal every month from here on out, how much sooner do you finish, and how much interest do you stop paying? Unlike tools that compute a payment from scratch, this one starts with your current balance, remaining term, and rate, then layers a second payment on top of your required one.
The reason extra payments are so effective is interest math. Each month, your lender charges interest on whatever balance remains. Anything you pay beyond that month's interest goes straight to reducing principal — and a lower principal means less interest accrues next month, so more of your regular payment also hits principal. That compounding effect is why even a modest extra amount can lop years off a mortgage.
The calculator runs two amortization sequences in parallel: one with your normal payment only, one with your normal payment plus the extra. It reports the difference in payoff month and total interest paid.
The formula
N = -log(1 - r·B / P) / log(1 + r)
Where:
- B = current loan balance
- r = monthly interest rate (annual rate ÷ 12)
- P = total monthly payment including the extra principal
- N = number of months until payoff
Run it once with P = required payment, again with P = required + extra. The gap between the two N values is the time shaved off; the interest saved is the difference in total paid minus principal.
Worked example
You're several years into a mortgage. The current balance is $220,000, the rate is 5.00% p.a., and 20 years remain. Required monthly payment: $1,454. You decide to add a flat $200/month extra principal payment, bringing total monthly outflow to $1,654.
Scenario A — required payment only
- Monthly rate: 0.05 / 12 = 0.0041667
- N = -log(1 - 0.0041667 × 220,000 / 1,454) / log(1.0041667)
- N ≈ 240 months (20 years)
- Total paid: 240 × $1,454 = $348,960
- Total interest: $348,960 − $220,000 = $128,960
Scenario B — adding $200/month extra
- P = $1,454 + $200 = $1,654
- N = -log(1 - 0.0041667 × 220,000 / 1,654) / log(1.0041667)
- N ≈ 173 months (about 14 years 5 months)
- Total paid: 173 × $1,654 = $285,942
- Total interest: $285,942 − $220,000 = $65,942
Result
| Metric | Required only | With $200 extra | Difference |
|---|---|---|---|
| Payoff time | 20 years | ~14 yr 5 mo | ~5 yr 7 mo shorter |
| Total interest | $128,960 | $65,942 | ~$63,000 saved |
| Total paid | $348,960 | $285,942 | $63,018 less |
That $200/month — about $6.57 a day — cuts the term by roughly five and a half years and saves around $63,000 in interest.
Things to watch
- Confirm the extra goes to principal, not to next month's scheduled payment. Servicers sometimes default to the latter unless you check a box or send instructions.
- Prepayment penalties still exist on some loans. Verify your note before committing.
- Opportunity cost matters. If your mortgage rate is 3% and you can earn 7% after tax elsewhere, paying down the loan early isn't automatically the better financial move.
- This is an estimate, not professional advice. Real payoff depends on rate changes (if your loan is variable), escrow adjustments, and whether you maintain the extra payment consistently for the full period shown.
- Round numbers like the example above are illustrative; your lender's exact day-count and rounding may shift results by a month or a few dollars.