How Much Do Extra Mortgage Payments Save? An Example

Every extra dollar you pay toward principal stops accruing interest for the rest of the loan. Early in a mortgage, when most of each payment goes to interest, that effect is large.

A worked example

Take a hypothetical new $300,000 mortgage at 6.5% over 30 years. The scheduled principal-and-interest payment is $1,896.20, and over the full term the loan charges $382,633 in interest.

Strategy	Payoff time	Time saved	Interest saved
Scheduled payments only	30 years	—	—
$200 extra every month	23 yr 1 mo	6 yr 11 mo	$103,449
One-time $10,000 at the start	27 yr 3 mo	2 yr 9 mo	$53,917

An extra $200 a month, about 10% more than the scheduled payment, removes nearly seven years of payments and over $100,000 of interest.

Try your own loan in the extra payment calculator.

Before you pay extra

• Confirm the money goes to principal. Ask your servicer how extra payments are applied, and label them as principal if needed.
• Check for a prepayment penalty. Most modern mortgages have none, but confirm in your loan documents.
• Compare the alternatives. Paying off a 6.5% mortgage early is a guaranteed 6.5% return. Clearing higher-rate debt, capturing an employer retirement match, or building an emergency fund often comes first.
• Keep it flexible. Extra payments usually don't lower your required monthly payment, and money paid into a house is harder to get back than savings.

Source: CFPB: Prepayment penalties.