BCBetter Calculators

Extra Mortgage Principal Payment Calculator

See how much interest you save and how many years you cut from your mortgage by making extra principal payments.

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Enter your values and click Calculate

How It Works

The standard monthly payment is derived 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 (annual rate ÷ 12), and n is the remaining months. The total interest under the standard scenario is then (M × n) − P. The accelerated scenario runs a month-by-month loop in which each month the interest on the current balance is computed, the combined payment of M plus the extra amount is applied, and the balance is reduced by the principal portion. The loop ends when the balance reaches zero. The difference in total interest paid between the two scenarios is the amount saved, and the difference in months is the time saved.

Examples

$280k at 6.5%, $200 extra/month
$280,000 remaining balance, 6.5% rate, 25 years left, and an extra $200 each month.
Result: Saves over $40,000 in interest and cuts approximately 4 years from the loan.
$350k at 7%, $300 extra/month
Larger balance at a higher rate with a $300 monthly overpayment.
Result: Saves approximately $70,000 in interest and pays off roughly 6 years sooner.
$150k at 5.5%, $100 extra/month
A smaller loan near the midpoint of its term with a modest overpayment.
Result: Saves approximately $10,000 in interest and shortens the loan by about 2 years.

Frequently Asked Questions

Does the extra payment go directly to principal?
In most standard mortgages, payments above the scheduled amount are applied to the principal balance once the current month's interest is covered. You should confirm this with your loan servicer and specify that extra funds are to be applied to principal.
Is it better to invest the extra money or pay down the mortgage?
The decision depends on your mortgage interest rate compared to expected after-tax investment returns and your personal risk tolerance. Paying down the mortgage offers a guaranteed, risk-free return equal to your interest rate, while investing offers potentially higher but uncertain returns.
Does the amount of extra payment matter much?
Even small extra payments make a meaningful difference because interest savings compound over the remaining loan term. An extra $50 per month on a 25-year loan can save several thousand dollars in total interest and reduce the term by more than a year.

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