BCBetter Calculators

Mortgage Extra Payment Calculator

See how much interest and time you save by making extra monthly mortgage payments.

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Enter your values and click Calculate

How It Works

The calculator first computes the standard monthly payment using the amortisation formula: M = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where P is the remaining balance, r is the monthly interest rate, and n is the number of months remaining. It then runs two separate month-by-month simulations. In the baseline scenario each month's payment is M, and interest accrues on the outstanding balance at rate r. In the accelerated scenario the monthly payment is M plus the extra amount. Because the extra payment reduces principal faster, less interest accrues in subsequent months. The total interest paid in each scenario is summed, and the difference is the interest saved. The difference in the number of months to reach a zero balance is the time saved.

Examples

$280k at 6.75%, $200 extra/month
A homeowner 3 years into a 30-year mortgage with 27 years remaining adds $200 per month.
Result: Saves roughly $47,000 in interest and pays off approximately 4 years early.
$400k at 7%, $500 extra/month
Larger balance with a higher extra payment to model aggressive paydown.
Result: Saves over $90,000 in interest and cuts more than 7 years from the term.
$180k at 5.5%, $100 extra/month
A modest overpayment on a smaller loan at a lower rate.
Result: Saves approximately $12,000 in interest and shortens the loan by about 2.5 years.

Frequently Asked Questions

Does the extra payment go directly to principal?
In most standard mortgages, any payment above the scheduled amount is applied directly to the principal balance. Reducing principal faster means less interest accrues in every subsequent month, which is why the savings compound significantly over time.
Should I check for prepayment penalties before making extra payments?
Yes. Some mortgage agreements, particularly older or non-conventional loans, include prepayment penalty clauses that charge a fee if you pay down the balance ahead of schedule. Review your loan documents or contact your servicer before committing to a regular overpayment strategy.
Is it better to make extra monthly payments or one large annual payment?
Monthly extra payments reduce the principal slightly sooner each month, resulting in marginally more interest saved than a single equivalent lump sum paid at year end. The difference is usually small, so the best approach is whichever fits your cash flow.

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