Extra Payment Calculator

Background.

Add $200 a month to a $300,000 mortgage at 6.5% over 30 years and the loan is gone in 277 months instead of 360, almost seven years early, with $103,448.80 less interest paid. The scheduled payment on that loan is $1,896.20, so the extra is about a tenth more each month. The saving is far larger than the extra money itself because of how amortization works: interest is charged each month on whatever balance is left, and every dollar that comes off the balance early stops attracting interest for all the months that remain. Since the required payment stays the same, the interest you no longer owe goes into principal instead, and the end date keeps moving closer.

Timing matters almost as much as the amount. The same $200 started in month 61, five years in, saves $66,943.95 and ends the loan after 300 months. Started in month 121 it saves $39,657.95; started in month 241, with ten years left, only $8,380.82. Early in a mortgage most of each payment is interest, so principal paid off then has the longest time left to save interest.

The calculation follows a fixed-rate, fully amortizing loan month by month, with and without the extra amount, and reports the new payoff time, the original and new totals of interest, and the difference. It assumes every extra dollar is credited to principal in the month it is paid, that the loan carries no prepayment penalty and that the rate never changes. Those three conditions are worth checking with your servicer before you commit, and the questions below show how to do it.

What is extra payment calculator?

An extra payment is money paid on a loan beyond the scheduled instalment and credited directly against the principal. On an amortizing loan each scheduled payment covers that month's interest first and puts the rest toward principal, so the split shifts over time. In the first month of a $300,000 loan at 6.5%, interest is 300,000 × 0.065 ÷ 12 = $1,625, leaving only $271.20 of the $1,896.20 payment to reduce the balance. An extra $200 that month raises the principal repaid from $271.20 to $471.20. Because the lender keeps charging the same rate on a smaller balance while you keep paying the same instalment, the loan reaches zero sooner. The extra payment does not change the contract: the required payment and the rate stay as they were, and only the payoff date and total interest change.

How to use this calculator.

1. 01Enter the Loan amount, Annual interest rate and Loan term from your loan documents. Use the note rate, shown as the interest rate on your Closing Disclosure, not the APR: the APR folds in points and fees and is not the rate interest is charged at.
2. 02Enter the Extra monthly payment you plan to add on top of the required instalment, excluding escrow for taxes and insurance, which does not reduce the loan.
3. 03Set the Start month to the payment number when the extra begins, with 1 for the first payment of the loan.
4. 04For a loan you have already been paying, keep the original amount and term and set the start month to the next payment number, 61 if you have made 60 payments, so the schedule before the extra matches yours.
5. 05Read the new payoff time in months and compare it with the original term in months, then read the original and new interest totals and the interest saved.

The formula.

The required payment comes from the standard annuity formula, M = P × r ÷ (1 − (1 + r)⁻ⁿ), where P is the loan amount, r the monthly rate (the annual percentage divided by 1,200) and n the number of monthly payments, the term in years times 12. Without any extra, total interest is simply M × n − P: everything paid minus what was borrowed. At a 0% rate the payment is just P ÷ n and there is no interest to save, though the term still shortens.

With an extra payment the loan is followed month by month. Each month the balance grows by its interest and falls by the payment: Bₙ₊₁ = Bₙ(1 + r) − (M + E), where E is the extra amount from the start month onwards and zero before it. When the balance plus that month's interest is less than the full payment, the final payment is cut to exactly what is owed and the loan ends that month. New total interest is the sum of each month's interest charge, and interest saved is the original total minus the new one. If the start month falls after the loan would have ended anyway, nothing changes.

When the extra starts with the very first payment, the payoff month also has a closed form: n′ = −ln(1 − P × r ÷ (M + E)) ÷ ln(1 + r). For $300,000 at 6.5% with $1,896.20 plus $200, that gives 276.3, so the loan ends with a partial 277th payment. The same expression shows what drives the result: the gap between the total payment and the first month's interest, P × r, which is $1,625 here. The scheduled payment clears that interest by $271.20; an extra $200 widens the gap by almost three-quarters, and the payoff date moves accordingly.

The model assumes interest is charged monthly at one twelfth of the annual rate, which is how most fixed-rate mortgages work, and that the extra is credited the same month. It carries the payment at full precision rather than rounding to the cent each month as a lender's statement does, so expect the results to differ from a servicer's schedule by cents or a few dollars. It does not handle rate changes, missed or irregular payments, one-off lump sums, fees or a recast of the payment.

A worked example.

Frequently asked questions.

References& sources.

1. [1]CFPB (2024). "How does paying down a mortgage work?"
2. [2]IRS (2025). "Publication 936, Home Mortgage Interest Deduction."
3. [3]CFPB (2023). "How should I use lender credits and points (also called discount points)?"
4. [4]CFPB (2024). "What fees or charges are paid when closing on a mortgage and who pays them?"
5. [5]FTC (2025). "How To Get Out of Debt."