Did you know that making even small extra payments on your mortgage can shorten your loan term and save you thousands of dollars in interest? A mortgage calculator with extra payments helps you see exactly how much you could save and how much sooner you could be mortgage-free by paying a little more each month, biweekly, or annually.
As part of its commitment to educate and empower consumers, Kikoff offers a mortgage calculator with extra payments. Our free tool lets you compare your original payoff timeline against a new one that factors in your additional contributions, so you can make a more informed decision about how to manage your home loan. You can also use the mortgage amortization calculator to see a full year-by-year breakdown of your loan. Let's dive in.
How to use the mortgage calculator with extra payments
Our mortgage calculator with extra payments is built to be user-friendly. Here's how to get the most accurate estimate:
- Enter the home price: Start with the purchase price of the property you're considering, or your current home's purchase price if you already have a loan
- Add your down payment: Input either a percentage or a dollar amount
- Enter your extra payment amount: This is the additional amount you plan to pay on top of your required monthly payment
- Choose your extra payment frequency: Select monthly, biweekly, or annually depending on how you plan to make the extra contributions
- Choose your loan term: Select from a range of fixed and adjustable rate options to match your existing or planned loan
Once you enter these details, the calculator will show you how much interest you will save, how much sooner you will pay off your loan, your original and new payoff dates, the time saved, and the total interest you would have paid without extra payments. A visual breakdown also shows how your payments are split between principal, interest, and extra contributions over time.
Experiment with different extra payment amounts and frequencies to find the approach that works best for your budget. Even a modest additional payment each month can produce a surprising reduction in your total interest paid and loan term. You can also compare against the standard mortgage calculator to see your baseline.
How do extra mortgage payments work?
When you make a payment on your mortgage above the required monthly amount, that extra money goes directly toward reducing your principal balance. Since interest is calculated as a percentage of your remaining balance, a lower principal means less interest accrues with each passing month. Here is how it works in practice:
- You make your regular monthly payment which covers principal, interest, taxes, and insurance
- You add an extra amount on top of the required payment, directed toward principal
- Your remaining balance decreases faster than it would on the standard schedule
- Less interest accrues each month because the balance is lower
- Your loan is paid off sooner than the original term, often by several years
The more frequently you make extra payments, the greater the impact. Biweekly extra payments, for example, can compound the savings compared to a single annual lump sum of the same total amount, because the balance is reduced sooner in the year.
Extra payments: What you need to know
Before committing to a strategy of regular extra payments, there are a few things worth considering. First, check your loan agreement for prepayment penalties. Most modern mortgages do not carry these, but some do, and it is worth confirming before you start making additional payments.
Second, make sure your lender applies extra payments to your principal balance rather than treating them as an advance on future payments. When making extra payments, it is a good practice to note that they should be applied to principal reduction and to verify on your statement that they were applied correctly.
Third, consider whether extra mortgage payments are the best use of your money compared to other financial priorities. Paying down a low-interest mortgage early may be less beneficial than contributing to a retirement account or paying off higher-interest debt. The calculator can help you see the savings clearly so you can weigh them against your other options.
Terminology defined
Buying a home and managing a mortgage can feel daunting, and the terminology is a big reason why. Here are some terms you should learn to help make the process less mysterious:
- Principal: The remaining balance you owe on your loan, which extra payments directly reduce
- Interest rate: The percentage the lender charges you for borrowing money
- Loan term: The number of years over which you are scheduled to repay the loan
- Payoff date: The date on which your loan balance reaches zero based on your payment schedule
- Interest saved: The total amount of interest you avoid paying by making extra payments
- Time saved: The number of months by which extra payments shorten your loan term
If you have questions or concerns about what any of these terms mean, ask your lender. They can further explain how they impact your mortgage payoff strategy so you can make an informed decision.
How your credit score impacts your mortgage
If you are still in the process of securing a home loan, your credit score will play a significant role in the interest rate you qualify for. The higher your score, the better your odds of being approved for a competitive rate. A lower interest rate means more of each payment goes toward principal from the start, which makes extra payments even more impactful. Even a modest improvement in your credit score before you apply can set you up for meaningful long-term savings. Lenders will also conduct a hard credit inquiry and review your credit report when you apply.
Use Kikoff to improve your mortgage approval odds
Want to boost your score and strengthen your credit history? Kikoff includes a variety of tools designed to help, including an invitation-only credit builder loan, secure credit card, free verified rent reporting, and more.
Take a step toward stronger credit habits with Kikoff.
Frequently asked questions
How much can I save by making extra mortgage payments?
The savings depend on your loan balance, interest rate, loan term, and how much extra you pay and how often. In general, the earlier in your loan term you begin making extra payments, the greater the impact, because interest savings compound over time as your balance decreases faster. Use the mortgage calculator with extra payments to enter your specific numbers and see a personalized estimate of your savings and time saved.
Is it better to make extra payments monthly, biweekly, or annually?
Making extra payments more frequently tends to produce slightly better results because your principal is reduced sooner, which means less interest accrues over the course of the year. Monthly extra payments will typically outperform a single annual lump sum of the same total amount. That said, any extra payment strategy is better than none, so the best frequency is whatever you can sustain consistently within your budget.
Should I make extra mortgage payments or invest the money instead?
This depends on your interest rate, your investment returns, and your personal financial priorities. If your mortgage rate is relatively low and you expect your investments to earn a higher return over time, investing may produce better long-term results. If you have a higher mortgage rate or simply value the security of owning your home outright sooner, extra payments may be the right choice. Many financial advisors suggest a balanced approach that addresses both goals over time.
