Extra goes to the balance
Anything above the scheduled payment reduces principal directly, so next month's interest is charged on a smaller number. Tell your servicer to apply it as principal only.
Debt payoff
Mortgage payoff calculator
See what extra principal does to your loan. Add a monthly amount, a yearly amount, or a lump sum and watch the interest and the years fall.
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Your loan today
Where the loan stands
Extra principal
Anything above the scheduled payment goes straight to the balance. Leave a field at $0 if it does not apply.
The new schedule
Year by year to payoff
Every extra dollar removes the interest that dollar would have been charged for the rest of the loan, which is why the balance falls faster each year than the one before.
| Year | Starting balance | Scheduled principal | Extra principal | Interest paid | Ending balance |
|---|---|---|---|---|---|
| 1 | $250,000.00 | $4,200.59 | $2,400.00 | $16,055.65 | $243,399.41 |
| 2 | $243,399.41 | $4,642.62 | $2,400.00 | $15,613.62 | $236,356.79 |
| 3 | $236,356.79 | $5,114.29 | $2,400.00 | $15,141.95 | $228,842.50 |
| 4 | $228,842.50 | $5,617.54 | $2,400.00 | $14,638.70 | $220,824.96 |
| 5 | $220,824.96 | $6,154.48 | $2,400.00 | $14,101.76 | $212,270.48 |
| 6 | $212,270.48 | $6,727.39 | $2,400.00 | $13,528.85 | $203,143.09 |
| 7 | $203,143.09 | $7,338.69 | $2,400.00 | $12,917.55 | $193,404.40 |
| 8 | $193,404.40 | $7,990.89 | $2,400.00 | $12,265.35 | $183,013.51 |
| 9 | $183,013.51 | $8,686.80 | $2,400.00 | $11,569.44 | $171,926.71 |
| 10 | $171,926.71 | $9,429.29 | $2,400.00 | $10,826.95 | $160,097.42 |
| 11 | $160,097.42 | $10,221.51 | $2,400.00 | $10,034.73 | $147,475.91 |
| 12 | $147,475.91 | $11,066.80 | $2,400.00 | $9,189.44 | $134,009.11 |
| 13 | $134,009.11 | $11,968.68 | $2,400.00 | $8,287.56 | $119,640.43 |
| 14 | $119,640.43 | $12,931.00 | $2,400.00 | $7,325.24 | $104,309.43 |
| 15 | $104,309.43 | $13,957.75 | $2,400.00 | $6,298.49 | $87,951.68 |
| 16 | $87,951.68 | $15,053.27 | $2,400.00 | $5,202.97 | $70,498.41 |
| 17 | $70,498.41 | $16,222.12 | $2,400.00 | $4,034.12 | $51,876.29 |
| 18 | $51,876.29 | $17,469.29 | $2,400.00 | $2,786.95 | $32,007.00 |
| 19 | $32,007.00 | $18,799.96 | $2,400.00 | $1,456.28 | $10,807.04 |
| 20 | $10,807.04 | $9,807.04 | $1,000.00 | $201.52 | $0.00 |
Know the number
How paying off a mortgage early works
Mortgage interest is charged on the balance you still owe. Send a dollar of extra principal today and you do not just remove a dollar of debt, you remove every future interest charge that dollar would have carried for the rest of the term. That is the whole mechanism.
Because amortization front-loads interest, the effect is strongest early in a loan, when most of the scheduled payment is interest and only a little touches principal. The same extra payment made in year two does far more than one made in year twenty.
The payment does not change
Your required payment stays the same and the loan simply ends sooner. Only a recast or a refinance lowers the monthly amount itself.
Escrow keeps running
Property taxes and insurance are not part of the loan balance, so they continue after payoff. Budget for them separately once the mortgage is gone.
Payoff terms worth knowing
- Principal-only payment
- Money applied directly to the balance rather than to next month's payment or escrow. It has to be designated, or the servicer may not treat it that way.
- Amortization
- The schedule that splits each payment between interest and principal. Interest is charged on the balance, so a smaller balance means less interest every month after.
- Recast
- Re-amortizing the loan after a lump sum so the required payment drops over the same remaining term. Usually a small fee, and far cheaper than refinancing.
- Refinance
- Replacing the loan with a new one, often at a shorter term or lower rate. It resets the schedule and carries closing costs.
- Prepayment penalty
- A fee some loans charge for paying off early. Uncommon on modern owner-occupied mortgages, but worth confirming before a large lump sum.
- Escrow
- The account holding your property tax and insurance money. Extra principal does not reduce it, so your total monthly bill still includes escrow after payoff of the loan portion.
The approaches
Ways to pay off a mortgage faster
They all do the same thing underneath, which is move money to principal sooner. They differ in how much discipline and paperwork each takes.
Extra every month
The steadiest approach, and easy to automate. Rounding the payment up to the next hundred is a common version that barely registers in a monthly budget.
Biweekly payments
Half a payment every two weeks produces 13 monthly payments a year instead of 12. That extra payment is the entire benefit, and you can replicate it for free without a servicer program.
Lump sums
A bonus, tax refund, or windfall applied to principal. Largest effect when it lands early, and worth confirming there is no prepayment penalty first.
Recast or refinance
A recast re-amortizes after a lump sum and lowers the payment for a small fee. Refinancing to a shorter term can cut the rate too, but restarts the schedule and adds closing costs.
Both sides
Should you pay it off early?
A guaranteed return equal to your interest rate is genuinely good, and it is not automatically the best use of the money. Here is the case each way, so you can weigh it against your own situation.
Reasons to pay it down
- Guaranteed, risk-free return. Every dollar earns your mortgage rate with no market exposure.
- Lower fixed costs. A smaller required housing payment makes a job loss or a career change less dangerous.
- Reaching PMI thresholds sooner. Extra principal can end mortgage insurance earlier on a conventional loan.
- It is simple. Certainty and a paid-off house are worth something the spreadsheet does not capture.
Reasons to wait
- Higher-rate debt first. Credit cards and personal loans almost always cost more than a mortgage.
- Employer match. A 401(k) match is an immediate return that a mortgage rate rarely beats.
- Emergency fund and liquidity. Money in the house is hard to reach without a sale or a new loan.
- A low fixed rate. If the loan costs less than safe alternatives earn, prepaying it is a choice, not a bargain.
Common questions
Mortgage payoff FAQ
Does paying extra on my mortgage lower my monthly payment?
No. Extra principal shortens the loan rather than shrinking the required payment, so your statement asks for the same amount next month. The exception is a recast, where the servicer re-amortizes the loan over the remaining term after a large lump sum and lowers the payment for a small fee. A refinance is the other way to change the payment, but it restarts the clock with new closing costs.
How much does an extra $100 a month save?
It depends on the balance, rate, and how long is left, which is what the calculator above is for. As a feel for the scale: on a $250,000 balance at 6.5% with 25 years to go, an extra $100 a month removes roughly three and a half years and saves tens of thousands in interest. The savings are largest early in a loan, when almost every scheduled dollar is going to interest anyway.
Is a biweekly mortgage payment worth it?
Paying half your payment every two weeks produces 26 half-payments a year, which is 13 full payments instead of 12. That single extra payment is where all the benefit comes from. You can get the identical result for free by entering one monthly payment in the extra yearly field above, or by adding one twelfth of your payment to the extra monthly field. Some servicers charge a fee to enroll in a biweekly program, which is worth avoiding when the do-it-yourself version is the same math.
Should I pay off my mortgage early or invest?
Paying down a mortgage is a guaranteed return equal to your interest rate, with no market risk. Investing carries risk but has historically returned more over long periods, and retirement accounts may add an employer match and tax advantages. The comparison also depends on your rate, your tax situation, how close you are to retirement, and how much the certainty is worth to you. Reasonable people land in different places, and this page does not pick for you.
How do I make sure extra money goes to principal?
Tell the servicer. Many will otherwise hold the extra as a prepayment toward next month, apply it to escrow, or park it in suspense, none of which reduces the balance. Most online portals have a dedicated principal-only field, and mailed checks should say principal only in the memo. Check the next statement to confirm the balance actually dropped by the amount you sent.
Is there a penalty for paying off a mortgage early?
Usually not on modern owner-occupied mortgages, but prepayment penalties still exist on some loans, particularly older ones, investment property loans, and certain non-qualified mortgages. They typically apply only in the first few years and are triggered by paying off or refinancing a large share of the balance. Your closing documents and your servicer can confirm whether one applies before you send a large lump sum.
Does paying extra remove PMI?
It can get you there sooner. On a conventional loan you can request cancellation once the balance reaches 80% of the original home value, and the servicer must drop it automatically at 78% if payments are current. Extra principal reaches those thresholds faster. FHA loans are different: mortgage insurance premiums often last the life of the loan regardless of the balance, and a refinance into a conventional mortgage is the usual way out.
Does paying off my mortgage hurt my credit score?
Closing a long-standing installment account can nudge a score down slightly by reducing your active credit mix, and the effect is usually small and temporary. It is not a good reason to keep a mortgage you would rather be rid of. The larger financial considerations are liquidity, your emergency fund, and what the money would otherwise earn.
How the comparison runs
Interestmonth = Balance × (Rate ÷ 12)
Each month charges interest on the live balance, then the scheduled principal and any extra come off. Both the scheduled and accelerated runs use the same payment, derived from your balance, rate, and remaining term, so the only difference between them is the extra principal you send.
- Monthly compounding
- Extras applied to principal
- Final balance lands on $0
This calculator provides an estimate for planning, not financial advice or a payoff quote. Your servicer's official payoff amount can include per-day interest, recording fees, and timing differences. Confirm how extra payments are applied, and whether a prepayment penalty exists, before sending a large lump sum.
Keep the plan moving
Extra payments are easier when the whole budget is visible.
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