Calculator: How much will I save by increasing my mortgage payment? (2024)

FAQs

How much can you save by making an extra mortgage payment? ›

Doing so can shave four to eight years off the life of your loan, as well as tens of thousands of dollars in interest. However, you don't have to pay that much to make an impact. Even paying $20 or $50 extra each month can help you to pay down your mortgage faster.

Throwing in an extra $500 or $1,000 every month won't necessarily help you pay off your mortgage more quickly. Unless you specify that the additional money you're paying is meant to be applied to your principal balance, the lender may use it to pay down interest for the next scheduled payment.

If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.

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You decide to make an additional $300 payment toward principal every month to pay off your home faster. By adding $300 to your monthly payment, you'll save just over $64,000 in interest and pay off your home over 11 years sooner.

Save on interest

Since your interest is calculated on your remaining loan balance, making additional principal payments every month will significantly reduce your interest payments over the life of the loan. By paying more principal each month, you incrementally lower the principal balance and interest charged on it.

Making extra payments of $500/month could save you $60,798 in interest over the life of the loan. You could own your house 13 years sooner than under your current payment.

To determine how much you can afford using this rule, multiply your monthly gross income by 28%. For example, if you make $10,000 every month, multiply $10,000 by 0.28 to get $2,800. Using these figures, your monthly mortgage payment should be no more than $2,800.

If you increase the extra payment by $400 per month, you not only shorten your mortgage by nine years, you save $159,602 in interest.

What happens if I pay an extra $300 a month on my mortgage principal? ›

Making extra monthly payments toward your mortgage principal can save you a substantial amount of interest over the long term. It can also allow you to pay off your mortgage in full much faster. However, before adding to your mortgage payments, consider paying down any of your high-interest credit card debt.

When you pay an extra $100 on your monthly mortgage payment, that entire amount goes to principal. You'll reduce your total balance much more quickly when you make an extra payment that goes directly to repaying your balance. You could cut around four years off your repayment time with just an extra $100 per month.

The additional amount will reduce the principal on your mortgage, as well as the total amount of interest you will pay, and the number of payments.

You will pay off your mortgage early and save yourself a lot of interest. The downside is that you might make more by investing that $1000 per month if your mortgage is at a very low interest rate. You'll pay it off faster, and save thousands upon thousands of dollars.

When you put extra money toward your initial loan balance (the principal), you can pay your loan faster and save on interest. 📈 Interest rate: what you pay to borrow money to purchase your home, calculated as a percentage of your loan balance. As you pay down your initial loan, your interest charges gradually decrease.

When you pay extra on a mortgage, you're paying above and beyond the regular monthly installment. The money you send is meant to apply directly to the loan principal, not the interest. This allows you to pay down your loan sooner and save money on interest.

By making a small additional monthly payment toward principal, you can greatly accelerate the term of the loan and, thereby, realize tremendous savings in interest payments.

When you pay an extra $100 on your monthly mortgage payment, that entire amount goes to principal. You'll reduce your total balance much more quickly when you make an extra payment that goes directly to repaying your balance. You could cut around four years off your repayment time with just an extra $100 per month.

No matter how much extra you pay each month, that amount can help shorten the life of your loan. Even making one extra mortgage payment each year on a 30-year mortgage could shorten the life of your loan by four to five years.