Extra Money Towards Mortgage Calculator
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Reviewed by Calculator Editorial Team
Use this calculator to determine how adding extra money to your mortgage payments affects your payoff timeline, interest savings, and overall savings. Whether you're considering a lump sum payment or regular additional contributions, this tool helps you visualize the impact of your extra payments on your mortgage.
How to Use This Calculator
Enter your current mortgage details and the amount of extra money you plan to pay. The calculator will show you how much faster you'll pay off your mortgage, how much less interest you'll pay, and your total savings.
Key Terms
Principal: The original amount of your mortgage.
Interest Rate: The annual percentage rate charged by your lender.
Current Monthly Payment: Your regular mortgage payment amount.
Extra Payment Amount: The additional amount you plan to pay each month.
How It Works
The calculator uses the amortization formula to determine how your extra payments affect your mortgage. Here's a simplified breakdown of the process:
Amortization Formula
The number of months to pay off the mortgage with extra payments is calculated using:
n = -log(1 - (P * r) / (P + E)) / log(1 + r)
Where:
- n = Number of months to pay off the mortgage
- P = Original principal
- r = Monthly interest rate (annual rate / 12)
- E = Extra payment amount
The calculator then compares this to the original payoff timeline to show your savings in time and interest.
Example Calculation
Let's say you have a $200,000 mortgage at 4% interest with monthly payments of $1,200. If you add $200 extra each month:
| Metric | Original | With Extra Payments |
|---|---|---|
| Payoff Time | 180 months (15 years) | 150 months (12.5 years) |
| Interest Paid | $48,000 | $36,000 |
| Total Savings | - | $12,000 |
You'll pay off your mortgage 2.5 years faster and save $12,000 in interest by adding just $200 per month.
Frequently Asked Questions
- Can I use this calculator for any type of mortgage?
- Yes, this calculator works for any standard mortgage with a fixed interest rate. It's most accurate for principal-and-interest payments.
- Does this calculator account for property taxes and insurance?
- No, this calculator focuses on the principal and interest components of your mortgage. Property taxes and insurance are not included in the calculations.
- How often should I make extra payments?
- You can make extra payments as often as you want, but monthly extra payments typically provide the most significant savings in terms of both time and interest.
- Is it better to make a lump sum payment or regular extra payments?
- Regular extra payments are generally more effective because they reduce the principal balance more consistently over time, leading to greater interest savings.