Extra Payments Mortgage Calculator

How to Calculate Additional Payments With This Calculator

To use the extra payments mortgage calculator, you'll need to provide a few pieces of basic information about your current loan and how much extra you plan to pay:

• Loan amount: Enter the original amount you borrowed.
• Loan term: Choose the original length of your mortgage. Options include 10, 15, 20, 25 and 30 years.
• Interest rate: Input your current mortgage interest rate.
• Remaining loan term: Enter how much time is left on your mortgage. You can specify this in years and months.
• Extra payment: Choose how frequently you want to make additional payments (monthly, biweekly, annual or lump sum) and enter the dollar amount.

Once you've entered your loan details, you'll see several outputs, including:

• Your new monthly payment
• The total amount you'll pay
• The total interest you'll pay
• New payoff time compared to the original loan repayment term
• Interest savings

What to Consider Before Making Extra Mortgage Payments

While paying off your mortgage early sounds appealing, it may not always be the smartest financial move. You should evaluate your complete financial picture before committing extra funds to your mortgage. Here are some steps to consider:

1. Pay off higher-interest debt first. If you carry balances on credit cards or other high-interest loans, you'll typically save more money by paying those off first.
2. Build an emergency fund. Financial experts generally recommend having three to six months of basic expenses saved before directing extra money toward your mortgage. Without an emergency fund, you could find yourself relying on high-interest credit cards or personal loans if unexpected expenses arise.
3. Consider retirement contributions. If your employer offers a 401(k) match, contribute enough to receive the full match before making extra mortgage payments. That employer match represents an immediate 100% return on your money, outweighing the interest savings from extra mortgage payments.
4. Evaluate other investment opportunities. Depending on your risk tolerance and investment timeline, you might earn higher returns by investing extra funds in the stock market or other securities rather than paying down a relatively low-interest mortgage.
5. Assess your mortgage terms. Review whether your mortgage has prepayment penalties. Some loans charge fees for paying off your balance early, which could reduce or eliminate your savings.
6. Calculate how much extra you can afford. Determine your extra payment amount by reviewing your monthly budget and identifying areas where you can reduce spending. In addition to extra monthly payments, you may also consider using performance bonuses, tax refunds or other windfalls to be more effective.

Factors That Affect Your Mortgage Payment

Understanding the components of your monthly mortgage payment can help you identify opportunities to reduce your costs or pay off your loan faster. Here's how your payment is broken down:

• Principal: This is the amount you borrowed to purchase your home. Each monthly payment includes a portion that goes toward reducing your principal balance. Early in your loan term, a smaller percentage goes toward principal, but this increases over time as you pay down the balance.
• Interest: The interest is what your lender charges you to borrow money. Your interest rate can be fixed—staying the same throughout your loan term—or variable, where the rate fluctuates based on market conditions. Fixed-rate mortgages provide payment stability, while adjustable-rate mortgages typically start with lower rates that can change after an initial period.
• Property taxes: Local governments assess property taxes based on your home's value. These taxes fund schools, roads and other public services. Your lender typically collects a portion of your annual property tax bill each month and holds it in an escrow account until the tax payment is due.
• Homeowners insurance: Most mortgage lenders require you to maintain homeowners insurance to protect against damage from fire, weather and other covered events. Your monthly mortgage payment often includes an insurance premium that your lender collects, holds in escrow and pays on your behalf.

Depending on your situation, your mortgage payment may also include mortgage insurance premiums or homeowners association (HOA) fees.

Learn more: Current Mortgage Rates: What Will You Pay?

How to Make Extra Mortgage Payments

Once you've decided to make extra payments, you have several options for sending the additional funds to your lender:

• Adjust your autopay settings. The most straightforward method is to increase your automatic monthly payment through your lender's online portal. Most lenders allow you to specify that the extra amount should be applied to your principal balance. This is important because without specifying principal only, your lender might apply the extra payment to future interest.
• Mail a separate check. Send an additional payment by mail with a note or payment slip clearly indicating that the payment should be applied to the principal only. Keep records of these payments for your files.
• Make one large annual payment. If you prefer to use a windfall like a performance bonus or tax refund, that may be easier than keeping up with extra monthly payments.
• Switch to biweekly payments. Paying half your mortgage every two weeks will result in 26 total payments per year, effectively giving you one extra full month's payment annually.

The Bottom Line

Making extra mortgage payments can help you save money on interest charges and achieve debt-free homeownership sooner. Depending on how much you supplement your regular payment, you may be able to save tens of thousands of dollars and years of payments.

Before you commit to paying off your home loan early, however, it's important to evaluate other ways to make your money work harder for you through better interest savings or investment returns.

As you work to eliminate your mortgage debt, work to build and maintain a good credit score so you can also take advantage of other ways to save, such as mortgage refinancing or cheaper forms of other debt. With Experian's free credit monitoring tool, you can track your Experian credit report and FICO^® Score^Θ to stay on top of your progress.