Extra Mortgage Payment Calculator: Why Timing Decides What It Saves
An extra mortgage payment toward principal saves you all the interest that money would have accrued for the rest of the loan - so when you pay it largely decides what it is worth. On an illustrative $320,000 loan at 6.5% over 30 years, a single $10,000 extra payment made in the first month saves $53,943.23 in interest. The identical $10,000 paid in month 300 saves $3,613.95. Same loan, same money, about 15 times the result.
Below is the formula, the amortization schedule behind it, and worked numbers for the three questions people actually ask: a lump sum, a monthly extra, and one extra payment a year.
The formula
A fixed-rate mortgage payment is:
M = P × r / (1 - (1 + r)^-n)
where P is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. Each month:
- interest = current balance × r
- principal = M - interest
- new balance = old balance - principal - any extra payment
For $320,000 at 6.5% over 360 months, M = $2,022.62. Pay only that for 30 years and you pay $408,142 in interest - 128% of the amount borrowed, $728,142 in all.
Why the timing matters: the amortization schedule
The payment is level. What it is made of is not. The first payment of $2,022.62 is $1,733.33 of interest and just $289.28 of principal - 86% interest. The last payment is $10.90 of interest and $2,011.72 of principal. Principal does not overtake interest until payment 233, in year 20.
| Year | Interest paid | Principal paid | Balance at year end |
|---|---|---|---|
| 1 | $20,695 | $3,577 | $316,423 |
| 5 | $19,636 | $4,636 | $299,555 |
| 10 | $17,861 | $6,410 | $271,284 |
| 15 | $15,407 | $8,864 | $232,189 |
| 20 | $12,014 | $12,257 | $178,129 |
| 25 | $7,322 | $16,949 | $103,373 |
| 30 | $833 | $23,438 | $0 |
An extra payment goes entirely to principal, so it skips the queue. A dollar removed from the balance in month one would otherwise have charged interest for every remaining month of the loan; a dollar removed late in the loan has only a few years of interest left to charge. That is the whole insight, and the rest of this page is just measuring it.
Example 1: the same $10,000, paid at different times
One lump-sum extra payment, the regular payment unchanged afterward, so the loan simply ends sooner:
| Paid in month | Interest saved | Saved per $1 | Term cut by |
|---|---|---|---|
| 1 | $53,943.23 | $5.39 | 31 months |
| 60 | $37,546.39 | $3.75 | 23 months |
| 120 | $24,976.41 | $2.50 | 17 months |
| 240 | $8,697.78 | $0.87 | 9 months |
| 300 | $3,613.95 | $0.36 | 6 months |
Paid in month one, every extra dollar saves $5.39 - the $10,000 comes back about 5.4 times over and the loan ends 31 months early. Paid in month 300, each dollar saves $0.36 and trims 6 months. Nothing about the loan changed except the calendar.
Example 2: an extra amount every month toward principal
A recurring extra payment does the same work in small pieces, starting immediately:
| Extra each month | Paid off in | Total interest | Interest saved |
|---|---|---|---|
| None | 30 years | $408,142 | $0 |
| $100 | 26 years 2 months | $346,444 | $61,698 |
| $250 | 22 years 3 months | $285,148 | $122,994 |
| $500 | 18 years | $222,590 | $185,552 |
An extra $100 a month from the first payment saves $61,698 and takes 46 months off the term, for $31,400 of extra payments in total. At $500 a month, the 30-year loan is gone in 18 years.
The timing rule applies here too. Here is the same $100 a month, started at three different points and kept up until the loan is paid off:
| $100 a month starting | Extra paid in total | Interest saved | Saved per $1 |
|---|---|---|---|
| Year 1 | $31,400 | $61,698 | $1.96 |
| Year 11 | $21,900 | $22,332 | $1.02 |
| Year 21 | $11,300 | $4,532 | $0.40 |
Started in year one, each extra dollar saves $1.96. Started in year 21, each dollar saves $0.40 - the extra payments still shorten the loan, but they buy far less interest per dollar.
Example 3: one extra mortgage payment a year
One plan is a “13th payment”: one extra full payment of $2,022.62 each year. The amount per year is the same whichever way you pay it, but the timing still moves the result:
| How the 13th payment is made | Paid off in | Interest saved |
|---|---|---|
| In full, first month of each loan year | 24 years 1 month | $96,590 |
| Split: $168.55 extra every month | 24 years 2 months | $93,073 |
| In full, last month of each loan year | 24 years 4 months | $89,583 |
All three save between $89,583 and $96,590 and cut the loan by 68 to 71 months. But paying the extra at the start of each loan year rather than the end is worth $7,006 more over the life of the loan, for the same amount each year - the money just reaches the balance 11 months sooner each time. Splitting it into $168.55 a month lands in between.
Make sure it goes to principal
All of the figures above assume the extra money reduces the principal balance in the month you pay it. How a servicer applies money beyond the scheduled payment is set by your loan terms and the servicer’s own procedures, so check your statement after the first extra payment: the principal balance should drop by the extra amount, not just show a credit toward next month’s bill. If your servicer has a “principal only” or “additional principal” option, that is what the numbers here describe.
Two related things this page does not cover. A recast keeps the term and lowers the monthly payment after a large lump sum, which changes the arithmetic. And whether extra mortgage payments beat investing the same money is a separate comparison that depends on your rate, your taxes and your alternatives - it exists, and it is worth running, but it is not the question here.
If you are weighing a lower rate instead, the refinance break-even calculator post shows what a new loan term does to the math.
How these were calculated
Each month, interest is the balance times the annual rate divided by twelve; the scheduled payment of $2,022.62 covers that interest first and the rest reduces principal; any extra payment that month reduces principal in full. The regular payment is held constant after an extra payment, so extra payments shorten the term rather than lowering the payment. The final month pays only what is owed. “Interest saved” compares total interest against the same loan with no extra payments.
Every figure was computed twice - once by month-by-month amortization code and once by an independent closed-form balance formula - and the two agree to the cent. The loan amount and rate are illustrative, not a quote or a typical rate, and none of this is financial advice.
If you want this run on your own loan - your balance, your rate, a lump sum and the month you could pay it - the workbook below does exactly this arithmetic, and the calculator pack covers it alongside the rest of the home-buying numbers.