How extra mortgage payments work
Your monthly mortgage payment covers two things: interest for the month and principal reduction. Early in a 30-year loan, most of your payment is interest. When you throw extra money at the principal, next month's interest charge is slightly lower — so more of your regular payment goes to principal. That virtuous cycle compounds over time.
Why even $50 extra matters
On a $250,000 loan at 6.5%, paying just $50 extra per month can cut around 2–3 years off a 30-year mortgage and save $15,000–$20,000 in interest. That $50 is doing heavy lifting because it directly attacks the balance that generates future interest charges.
Tips to make extra payments painless
- Round up. If your payment is $1,532, just pay $1,600 — the rounding disappears in your budget but adds up big on your loan.
- One extra payment a year. Splitting your monthly payment in half and paying every two weeks results in one extra full payment per year.
- Windfalls go to principal. Tax refund, bonus, birthday money — a lump sum to principal creates the same math, just all at once.
This calculator assumes a fixed interest rate and does not account for escrow, PMI, or other loan fees. Always confirm payoff details with your loan servicer.