Mortgage Payoff Calculator
Adding extra principal every month is the highest-guaranteed-return investment most people can make. This calc shows you exactly how much interest you save and how many years you cut off.
Your loan
Your strategy
Results
Interest saved
$116,640
vs paying only the scheduled $1,995.91/mo
Time saved
7y 1m
Paid off in 22y 11m
Scheduled P&I
$1,995.91
Your normal monthly payment
Effective payment
$2,195.91
With extra principal added
Total interest (no extra)
$418,527
Cumulative interest paid on the original schedule
Comparison
| Scheduled only | With extras | |
|---|---|---|
| Months to payoff | 360 | 275 |
| Years to payoff | 30.0 | 22.9 |
| Total interest | $418,527 | $301,887 |
| Total payments | $718,527 | $603,875 |
Why extra principal pays off so well
Every dollar of extra principal earns a risk-free, after-tax return equal to your mortgage rate. At a 7% loan, that's a 7% guaranteed return — better than most bonds, with zero market risk and no tax drag (since you never report the "earnings" — they show up as a smaller balance).
The catch: the money is illiquid until you refinance or sell. If you don't have a 6-month emergency fund, fund that first. If you do, extra principal beats just about anything else in your portfolio at today's rates.
When NOT to pay extra principal
- You have higher-interest debt (credit cards, personal loans). Pay those first.
- Your mortgage rate is sub-4% (locked in 2020-2021). Index funds historically beat that.
- You plan to sell or refi in < 3 years — you'll never realize the savings.
- You're not maxing your 401k match. Take the free money first.
Frequently asked questions
What's the difference between extra principal and biweekly payments?
Biweekly payments split your monthly payment in half and pay every two weeks. Over 12 months you make 26 half-payments = 13 full payments, so one extra payment per year. It's mechanically the same as adding ~1/12 of your payment as 'extra principal' each month. Most lenders charge a fee to set up biweekly — DIY by sending extra principal monthly with no fee.Does my lender accept extra principal payments?
Yes — federal law (the Truth in Lending Act) prohibits prepayment penalties on most owner-occupied mortgages. Investment property loans CAN have prepayment penalties (check your note). When paying extra, write 'apply to principal' on the check OR use your lender's online portal — most have a dedicated 'extra principal' option separate from regular payment.Should I refinance or pay extra principal?
Different goals. Refinancing changes the rate; extra principal changes the term. If you can refinance into a meaningfully lower rate AND plan to stay long enough to recover closing costs (see our Refi Break-Even calculator), do that first. Then add extra principal on top of the new lower payment if cash flow allows.Will paying off early hurt my taxes or credit?
Tax: paying off early reduces your mortgage interest deduction over time. For most homeowners post-2017 (when the standard deduction doubled), the mortgage interest deduction doesn't change their taxes anyway. Credit: paying off completely closes the account, which can briefly ding your credit mix and average account age. Both effects are minor for most people.What about a lump sum from a bonus or inheritance?
Same math, applied once at the start. A $50,000 lump sum on a $300k loan at 7% saves more in interest than 25 years of $200/month extra payments. Toggle the 'lump sum' field above to see exactly. Same caveat: only do this if your emergency fund and high-interest debt are handled.Can I get the extra principal back if I need it?
Not directly — once paid, it's gone toward principal. You'd need a HELOC or cash-out refi to access the equity again, both with their own costs and approval requirements. That's why we say emergency fund first: extra principal converts liquid cash into illiquid equity, which is great for net worth but bad for unexpected expenses.
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