Adding even $100 a month to your mortgage principal can cut years off the loan and save tens of thousands in interest, because every extra dollar attacks the balance before interest can pile up on it. On a $350,000 loan at 6.5% over 30 years, an extra $100 per month pays the loan off about 3.5 years early and saves roughly $62,600 in interest. The key difference from a fixed biweekly plan: an extra payment can be any amount, any month, with no schedule to commit to.
The direct answer: why a small extra payment does so much
Your normal payment is split between interest and principal, and early on it is mostly interest. When you send extra money labeled "apply to principal," none of it goes to interest. It shrinks the balance immediately, so next month's interest is calculated on a smaller number, and that effect compounds for the entire life of the loan.
That is why $100 extra never just "saves $100." It removes a future stream of interest that would have ridden on top of that balance for years. The earlier in the loan you do it, the bigger the payoff, because there are more months of interest left to cancel.
To see your own numbers, run them through the Extra Payment Mortgage Calculator before you commit a dollar.
Recurring extra payments: the numbers
Here is the same $350,000 loan at a 6.5% fixed rate over 30 years. The base principal-and-interest payment is $2,212.24, and over the full term you would pay about $446,406 in interest. Watch what a steady extra amount does:
| Extra per month | Loan paid off in | Years saved | Total interest | Interest saved |
|---|---|---|---|---|
| $0 (base) | 30.0 years | - | $446,406 | - |
| $100 | 26.5 years | 3.5 | $383,779 | $62,627 |
| $200 | 23.8 years | 6.2 | $338,309 | $108,097 |
| $300 | 21.8 years | 8.2 | $303,412 | $142,994 |
| $500 | 18.6 years | 11.4 | $252,803 | $193,603 |
Notice the savings grow faster than the extra amount. Doubling from $100 to $200 nearly doubles the interest saved, but going from $300 to $500 (a 67% increase in cash) lifts the savings far more than 67%. That is the compounding of a falling balance working in your favor.
One-time lump sum: the numbers
A one-time lump sum works the same way, just front-loaded. On that same loan, a single $20,000 extra principal payment in the first year pays the loan off about 4.5 years early and saves roughly $100,000 in interest over the life of the loan. Here is how different lump sizes compare, each applied early:
| One-time lump | Paid off in | Interest saved |
|---|---|---|
| $5,000 | 28.8 years | $28,459 |
| $10,000 | 27.6 years | $54,391 |
| $20,000 | 25.5 years | $100,019 |
| $50,000 | 20.5 years | $202,231 |
Recurring vs lump sum: a lump sum delivers the most savings per dollar because all of it hits the balance on day one. But few people have a large lump lying around, and a steady extra amount is easier to budget and adjust. Many homeowners do both: a lump from a bonus or tax refund, then a modest recurring add-on. You can model either case on the extra payment calculator.
How this differs from a biweekly plan
A biweekly mortgage plan is one specific method: you pay half your monthly payment every two weeks, which produces 26 half-payments (13 full payments) a year instead of 12. On our example loan, that extra payment a year is about $184 per month in effect and saves close to $101,800 in interest.
Custom extra payments are more flexible. You decide the amount and the timing, you can pause when money is tight, and you can pour in a windfall whenever it arrives. Biweekly is a fixed rhythm; custom extra payments are a dial you control. If your lender charges a fee to enroll in a biweekly program, a do-it-yourself extra payment usually beats it.
How to calculate extra payments by hand or in Excel
You do not need software to estimate the impact. Build a simple month-by-month schedule and add your extra to the principal line each row.
- Find your monthly rate. Divide the annual rate by 12. At 6.5%, that is 0.065 / 12 = 0.0054167.
- Compute one month's interest. Multiply the current balance by the monthly rate. On $350,000 that is $350,000 x 0.0054167 = $1,895.83.
- Find the principal portion. Subtract that interest from your normal payment: $2,212.24 - $1,895.83 = $316.41.
- Add your extra. New balance = old balance - principal - extra. With $300 extra: $350,000 - $316.41 - $300 = $349,383.59.
- Repeat down the rows until the balance hits zero. The row number where that happens is your new payoff month.
In Excel, put the balance in column A, interest as =A2*0.0054167, principal as =2212.24-B2, and the next balance as =A2-C2-300. Drag down and watch the term shrink. For the underlying payment math, the guide to calculating a mortgage payment walks through the full formula, and the mortgage calculator gives you the base payment to start from.
The one rule that matters most
Always confirm your extra money is applied to principal, not held as a prepayment of your next bill. Most servicers let you note this online or by check memo; if you do not, the cash may sit as a "credit" and earn you nothing. The U.S. Consumer Financial Protection Bureau explains how to direct extra payments to principal in its guidance on paying down mortgage principal.
Where this fits in your plan
Prepaying a mortgage is a guaranteed, tax-free return equal to your interest rate, which is powerful at higher rates. But it is not always the best home for a spare dollar. Before you prepay, make sure you have an emergency fund and have cleared any higher-interest debt. Then use the extra payment calculator to size an amount you can sustain.
Try it yourself
Run your own numbers in the free Extra Payment Mortgage Calculator — instant, private, no sign-up.
Open the Extra Payment Mortgage Calculator →Frequently asked questions
- How much does an extra $100 a month save on a mortgage?
- An extra $100 per month on a $350,000 loan at 6.5% over 30 years saves about $62,600 in interest and pays the loan off roughly 3.5 years early. The exact savings depend on your balance, rate and how early you start, because more remaining months means more interest to cancel.
- Is it better to pay extra monthly or one lump sum?
- A one-time lump sum saves the most per dollar because all of it hits the balance immediately, but a recurring extra amount is easier to budget and adjust. On a $350,000 loan at 6.5%, a $20,000 lump in year one saves about $100,000 in interest, while $200 extra each month saves about $108,000 over time. Many homeowners use both.
- Does paying extra on a mortgage lower my monthly payment?
- No - extra principal payments shorten the term but keep your required monthly payment the same. To actually lower the payment after a large lump sum, you need a loan recast or a refinance. Extra payments simply mean you finish the loan in fewer months.
- How is an extra payment different from a biweekly mortgage?
- An extra payment is any amount you choose, any month, while a biweekly plan is a fixed method of paying half your payment every two weeks to make 13 full payments a year. Custom extra payments give you more control and let you pause or add a windfall; biweekly locks you into one rhythm.
- Do I need to tell my lender the money is for principal?
- Yes - you must direct the extra cash to principal, or your servicer may treat it as a prepayment of your next bill, which saves you nothing. Most servicers let you mark "apply to principal" online or in the check memo, and you can confirm it landed on your next statement.
- Can I calculate extra mortgage savings in Excel?
- Yes - build a month-by-month table: interest equals balance times the monthly rate, principal equals your payment minus interest, and the next balance equals the old balance minus principal minus your extra. Drag the rows down until the balance reaches zero, and that row is your new payoff month.
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How to Calculate a Mortgage Payment, Step by Step · 15-Year vs 30-Year Mortgage: Which Should You Choose? · How Does Loan Interest Work? · How to Calculate a Car Loan Payment