Extra Mortgage Payments Calculator

Extra mortgage payments reduce your loan’s principal faster, which decreases future interest costs since they’re based on the outstanding balance. This lowers your total borrowing cost and can shorten the length of your loan.

It depends on your financial situation. Both approaches reduce total interest, but they have different cash flow requirements. Lump-sum payments save the most interest by reducing principal immediately, but they require a large amount of available funds. Extra recurring payments are easier to budget for, but the savings build more gradually.

Though it depends on your mortgage lender, you can typically make extra payments in person, online, by phone, or by mail. Your options are to increase regular payments or make a lump-sum prepayment. Be sure to specify that the extra amount should be applied to your principal and review your lender’s prepayment policies beforehand to avoid any penalties.

Yes, but they must be specified as principal-only. Vague instructions risk having the payment applied to future installments instead.​ Note that funds you provide first cover interest and scheduled principal payments, then any extra can go toward reducing your principal.

Before making any extra mortgage payments, you should review your mortgage contract for prepayment privileges and penalties. You should also consider the full scope of your financial goals and assess whether the money would be better used elsewhere, like paying off high-interest debt or keeping in an emergency fund.