Why extra payments save so much
Mortgage interest is charged on whatever you still owe. Money you pay beyond the scheduled payment goes straight to principal, so it stops costing interest for every remaining month of the loan. On a $320,000 loan at 6.5% over 30 years, paying $200 extra each month cuts about 6½ years off the loan and roughly $105,000 off the interest.
Extra on one particular payment
Most calculators only handle the same extra amount every month. Real life is lumpier: a bonus in March, a tax refund in April, nothing for a while. In the schedule, choose “Pay extra” on any payment to put a one-time amount toward that month. Add as many as you like; each can be changed or removed, and the savings update straight away.
Before you pay extra
- Check your loan has no prepayment penalty.
- Tell your lender the extra is for principal, so it isn't held as an early payment.
- Extra payments don't lower your required monthly payment; they shorten the loan. Asking the lender to “recast” after a large lump sum can lower the payment instead.
- Compare against other uses for the money, like high-interest debt or an emergency fund.