Loan Calculator Paying Extra On Principal

Written by Bill MacDonaldAugust 4th, 20223 minute read

Making extra payments on your mortgage can drastically reduce the number of years on the loan . . . and can save you a tremendous amount of interest. How much interest can you save with an extra payment every month? Take a look . . .

Initial Loan Amount
Loan term
Interest rate
Extra monthly payment
Save $30,580 in interest. You will pay off your mortgage 8 years and 8 months early.
Save $37,069 in interest. You will pay off your mortgage 5 years and 2 months early.
Save $39,937 in interest. You will pay off your mortgage 3 years and 8 months early.

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If you’re thinking about refinancing your mortgage to a lower interest rate or decreasing the length of the mortgage, you might be wondering if it would be better to make an extra payment instead of going through the refinance process. The extra payoff calculator will estimate the time you can payoff the mortgage starting with your present balance.

This calculator will not accept partial months. For example, 26 years and 1 month. Please use whole numbers.

  1. Initial Loan Amount - The initial loan amount is the original loan amount on day one.

  2. Term of the Loan – How long was the mortgage for? Thirty years, 15-years, etc.

  3. Years Remaining – If the original term of the mortgage was 30-years, and you have been paying the mortgage for 5 years, enter 25 years in this box.

  4. Interest Rate – Enter the current interest rate

  5. Extra Payment – How much extra do you want to pay each month?

Frequently Asked Questions About Extra Payments

Q. Can I be charged a penalty for paying off my mortgage early?
A. The answer is maybe. Here's what the Consumer Financial Protection Bureau says about prepayment penalties:

The kind of mortgage you have and the conditions of your loan affect whether or not you will be punished for paying off your mortgage early.

Certain loans include prepayment penalties in the early years of the loan.

These costs may rapidly mount up for homeowners who want to refinance their adjustable-rate mortgages before interest rates increase, and some fixed-rate mortgages also contain prepayment penalties.

Many states have laws that limit the amount or duration of time that these penalties may be imposed.

The presence of a prepayment penalty on your loan must have been disclosed in your loan documents.

It's often only disclosed in an "Addendum to the Note"-look for anything with the word "Addendum" in the title.
SOURCE: Consumer Financial Protection Bureau

Q. Can you pay ahead on your mortgage?
A. Call the mortgage company before you start making additional payments to get ahead on your mortgage.

The extra mortgage payments will very certainly be allocated to principle rather than future mortgage payments.

If the extra mortgage payments are allocated to principal reduction and you fail to make the following month's mortgage payment, the mortgage company will charge you a late fee and record a late or overdue payment on your credit report.

If you need to pay ahead for vacation or other reasons, contact your mortgage provider and, if they agree, get it in writing.

Or, even better, locate a trustworthy friend or family member to make the payment (s), or have the payment automatically deducted from a checking or savings account.

Q. Do extra mortgage payments go towards the principal?
A. The extra mortgage payment will be applied to principal on FHA, VA, USDA, and conventional loans... but, you should call the bank, mortgage company, or servicer just to make sure that the overpayment will be applied to principal. The lender may have specific requirements for the overpayment. Always keep your mortgage statements to prove the overpayment (s).

Q. Do FHA loans have a prepayment penalty?
A. Prepayment penalties are prohibited with FHA, VA and USDA mortgages

Q. How much do you save by making one extra mortgage payment a year?
A. Making just one extra mortgage payment each year can drastically reduce the amount of interest you pay and shorten the term of your mortgage. Here's an example:

Loan Amount
Interest Rate
Monthly Payment
Total Monthly Payments :
Extra Payment
Total Monthly Payments :
Interest Savings
Mortgage Payoff
27 Yrs 8 Mts
Early Payoff
2 Yrs 4 Mts

Q. Is it better to pay the principal or interest?
A. Interest is calculated on the principal balance, therefore, extra payments should always be paid against the principal balance and the interest balance will decrease.

Q. Is mortgage interest calculated daily or monthly?
A. Mortgage interest is typically calculated monthly