See exactly how much you'll save by making extra mortgage payments. Enter your current loan balance, interest rate, and extra monthly payment to instantly calculate your new payoff date, total interest saved, and months cut from your loan. Free, instant, no sign-up.
Extra payments — interest saved & early payoff date
Making extra mortgage payments is one of the highest-return financial moves available to US homeowners. On a $280,000 mortgage at 6.4% with a $1,750/month payment, just $200 extra per month saves approximately $44,000 in interest and cuts 5+ years off the loan. One full extra payment per year (bi-weekly payment strategy) on that same loan saves over $55,000 and cuts 6+ years. The math works because extra payments go entirely toward principal — reducing the loan balance on which future interest is calculated. Every dollar of principal eliminated early prevents decades of compound interest from accruing against you.
The break-even question many homeowners ask: should I pay extra on my mortgage or invest the difference? At 6.4% mortgage rate, paying down your mortgage gives a guaranteed 6.4% return (your interest rate). The S&P 500 historical average is ~10% nominal, ~7% real — but with significant volatility. The mathematically optimal answer at 6.4% is to invest if you're disciplined and have a long time horizon. But psychologically and practically, paying off the mortgage early provides a guaranteed risk-free return, reduces housing cost in retirement, and builds equity that can be accessed via HELOC if needed. Many financial advisors recommend splitting: put half toward extra mortgage payments and half toward investments.
Instead of 12 monthly payments, make 26 half-payments per year. This equals 13 full payments instead of 12 — one extra full payment annually. On a $280,000, 6.4%, 30-year loan this strategy alone saves ~$55,000 and pays off the loan 5–6 years early. Call your lender to set up bi-weekly payments or make one extra payment each December.
When making extra payments, always tell your lender (in writing or via their online portal) to apply the extra amount to principal — not to future payments. Without this instruction, many servicers apply overpayments to future scheduled payments, which does NOT reduce your balance as quickly and may not save interest at all.
Most conventional mortgages originated after 2014 (Dodd-Frank era) have no prepayment penalty. However, some older loans and certain non-QM loans may charge a fee (typically 2–5% of the amount prepaid) if you pay off within the first 3–5 years. Always check your loan documents before making large lump-sum extra payments.
Applying a $5,000 tax refund or bonus to principal on a $280,000 mortgage at 6.4% immediately saves ~$18,000 in total interest and cuts ~8 months off the loan. The earlier in the loan term you apply a lump sum, the greater the interest savings — because it reduces the base against which 20–30 more years of interest are calculated.