Key takeaway
Small extra principal payments compound into years of interest saved, but only if applied to principal, and early beats late.
Key takeaway
Paying even a little extra on your mortgage each month shortens the loan and cuts total interest by years. The earlier you start, the bigger the effect—and the math is surprisingly forgiving.
Why extra payments punch above their weight
A mortgage is amortized, so early payments are mostly interest. An extra dollar applied to principal in year one stops a lifetime of interest on that dollar. The later you pay extra, the less it saves, because less interest remains ahead.
Two ways to pay extra:
- A fixed extra amount each month: steady, automatic, and compounds into large savings.
- Occasional lump sums: tax refunds, bonuses—applied to principal when they arrive.
The Extra Payment Mortgage Calculator shows both the shortened term and the interest saved.
A worked example
On a $300,000 mortgage at 6% for 30 years, the normal payment is about $1,799 and total interest about $347,500.
- Add $200 a month: the loan ends about 6 years early and you save roughly $78,000 in interest.
- Add $100 a month: ends about 3.5 years early, saving about $45,000.
A few hundred dollars a month buys years of freedom and tens of thousands in saved interest. The earlier the extra starts, the larger the gap.
The mistake everyone makes: letting the extra disappear
Extra payments only help if they are applied to principal. Some lenders default extra cash to "next month's payment," which saves you nothing. You must mark it "apply to principal."
Other errors:
- Starting late: extra in year 20 saves far less than the same amount in year 2.
- Ignoring a better rate: refinancing may beat extra payments if rates have dropped.
- Paying extra while carrying high-interest debt: a credit card at 22% outranks a mortgage at 6%.
- Skipping the emergency fund first: a house-rich, cash-poor borrower is fragile.
How to do it
- Decide the monthly extra and set it up automatically—use the Extra Payment Mortgage Calculator to pick the amount.
- Confirm principal application with your servicer in writing.
- Send windfalls to principal whenever they arrive.
- Check against refinancing so you are not leaving a cheaper win on the table.
- Keep the order: emergency fund and high-rate debt before mortgage extra.
Related next steps
Find your savings with the Extra Payment Mortgage Calculator. To see the base payment, the Mortgage Calculator shows the full monthly cost, and the Mortgage Amortization Calculator reveals how slowly principal falls early on.