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

FAQs

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

Instead of paying twice a week, you can achieve the same results by adding 1/12th of your mortgage payment to your monthly payment. Over the course of the year, you will have paid the additional month. Doing so can shave four to eight years off the life of your loan, as well as tens of thousands of dollars in 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.

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.

Calculate Different Scenarios

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.

If you made an extra $100 monthly mortgage payment from the start of the time that you borrowed, you would end up repaying your debt a whopping four years faster than if you did not make an extra payment. In the process, you would save yourself $60,995 in interest.

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. These calculations are tools for learning more about the mortgage process and are for educational/estimation purposes only.

A common strategy is to divide your monthly payment by 12 and make a separate “principal-only” payment at the end of every month. Be sure to label the additional payment “apply to principal.” Simply rounding up each payment can go a long way in paying off your mortgage.

Adding Extra Each Month

Just paying an additional $100 per month towards the principal of the mortgage reduces the number of months of the payments. A 30 year mortgage (360 months) can be reduced to about 24 years (279 months) – this represents a savings of 6 years!

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.

Making extra payments can drastically reduce your loan term and save you a tremendous amount on interest charges. Use our extra mortgage payment calculator to see how fast you can pay off your mortgage with additional monthly payments.

Is $2,000 a month too much for a mortgage? ›

With $2,000 per month to spend on your mortgage payment, you are likely to qualify for a home with a purchase price between $250,000 to $300,000, said Matt Ward, a real estate agent in Nashville. Ward also points out that other financial factors will impact your home purchase budget.

This amortization schedule shows that paying an additional $300 each month will shorten the life of the mortgage from 30 years to about 21 years and 10 months (262 months vs. 360). It will also reduce the total amount of interest paid over the life of the mortgage by $209,948.

If you are under 45, it's difficult to argue that your dollars would be better served paying off your mortgage unless you are on Step 9, pre-pay low-interest debt. You should aim to be completely debt-free by retirement, and after age 45 you can begin thinking more seriously about pre-paying your mortgage.

Even one or two extra mortgage payments a year can help you make a much larger dent in your mortgage debt. This not only means you'll get rid of your mortgage faster; it also means you'll get rid of your mortgage more cheaply. A shorter loan = fewer payments = fewer interest fees.

As a general rule of thumb, making one extra mortgage payment per year at the start of your 30-year mortgage can shorten the term by approximately four to five years. You could potentially pay off the mortgage and own the home outright in 25 to 26 years instead of 30.

Even one or two extra mortgage payments a year can help you make a much larger dent in your mortgage debt. This not only means you'll get rid of your mortgage faster; it also means you'll get rid of your mortgage more cheaply.

Pay Extra Each Month

A common strategy is to divide your monthly payment by 12 and make a separate “principal-only” payment at the end of every month. Be sure to label the additional payment “apply to principal.” Simply rounding up each payment can go a long way in paying off your mortgage.