About this calculator
Extra payments toward principal are the simplest way to reduce a loan's total interest. Every dollar of principal paid early eliminates all the interest that would have accrued on it for the remaining loan life. This calculator shows the months saved and dollars saved for a steady extra monthly payment, a one-time lump sum, or both.
Why principal prepayment is so powerful
A standard 30-year mortgage front-loads the interest — in the first decade, most of your monthly payment goes to interest. Adding even a small extra payment in those early years gets applied to principal, which compounds the savings: less principal next month means less interest charged, which means more of the regular payment goes to principal, and so on. A $200/month extra payment on a typical 30-year loan often saves 5+ years and tens of thousands in interest.
Extra payment vs investing
The opportunity-cost question: should you prepay a 6% mortgage or invest in a 10%-historical-return index fund? Mathematically, the index fund wins on expected value — but principal prepayment is a guaranteed return with no volatility. Higher-rate debt (7%+) tilts toward prepayment; lower-rate debt with long horizons tilts toward investing. For most people the answer is "both, in proportion."
Strategic timing
A tax refund, year-end bonus, or inheritance applied as a lump sum can dramatically shorten the loan — especially in the first 10 years. After year 15 of a 30-year loan, the marginal interest savings drops sharply because the remaining principal is small.