Calculate Adding Money to Mortgage Every Month

Adding extra money to your mortgage each month can significantly reduce your loan payoff time and save you money on interest. This calculator helps you understand the impact of your extra payments on your mortgage balance, interest savings, and overall financial situation.

How It Works

When you make extra payments on your mortgage, you're essentially paying down the principal balance faster. This reduces the total interest you'll pay over the life of the loan. The calculator uses your current mortgage details to show you how different extra payment amounts will affect your loan payoff date and interest savings.

Important: Extra payments should be applied to the principal first to maximize interest savings. Some lenders may require you to make extra payments in specific ways, so check your loan agreement.

Key Factors to Consider

Your current mortgage balance
Your interest rate
Your loan term
How often you make extra payments (monthly, bi-weekly, etc.)
Whether you're adding a fixed amount or percentage of your payment

Formula

The calculator uses the following formula to determine how extra payments affect your mortgage:

Monthly Payment = P * (r(1+r)^n) / ((1+r)^n - 1) Where: P = Principal loan amount r = Monthly interest rate (annual rate / 12) n = Number of payments (loan term in years * 12)

For extra payments, the calculator adjusts the principal balance each month by subtracting the extra payment amount before calculating the new monthly payment.

Example Calculation

Let's say you have a $200,000 mortgage at 4% interest for 30 years. Your regular monthly payment is $1,073.64. If you add an extra $200 each month:

Scenario	Payoff Date	Interest Saved
Regular payments only	August 2044	$124,216
Add $200/month	May 2038	$164,216

In this example, adding $200 each month reduces your payoff date by 6 years and saves you $40,000 in interest.

Strategies for Adding Money to Your Mortgage

1. Bi-Weekly Payments

Making payments every two weeks instead of monthly effectively gives you 26 payments per year instead of 12, which can significantly reduce your payoff date.

2. Rounding Up Payments

If your regular payment is $1,073.64, you could round up to $1,100 each month, adding $26.36 per month.

3. Extra Principal Payments

Some lenders allow you to make extra principal payments without penalty. Check your loan agreement to see if this is an option.

4. Refinancing

If interest rates have dropped significantly, refinancing might be a better option than making extra payments on your current mortgage.

Before making extra payments, consider your overall financial situation. Extra mortgage payments reduce your payoff date but also reduce the money you have available for other goals.

Frequently Asked Questions

How much can I save by making extra mortgage payments?

The amount you save depends on your current mortgage balance, interest rate, and how much you're adding each month. Generally, the higher your interest rate and the larger your extra payments, the more you'll save.

Is it better to make extra payments or refinance?

It depends on your specific situation. If interest rates have dropped significantly, refinancing might be a better option. If you're locked into a low rate, making extra payments can be more beneficial.

Can I make extra payments without penalty?

Some lenders allow extra principal payments without penalty. Check your loan agreement or contact your lender to confirm.

How do extra payments affect my credit score?

Making extra payments on time can help improve your credit score by reducing your credit utilization ratio and showing lenders you're managing your debt responsibly.

What if I can't make my regular payment plus extra?

If you're having financial difficulties, contact your lender immediately. They may offer forbearance or other solutions to help you avoid late payments.