Home
Back
Mortgage Savings Formula:
| From: | To: |
Extra mortgage payments can significantly reduce the total interest paid over the life of a loan and shorten the loan term. This calculator helps you understand how much you can save by making additional payments toward your mortgage principal.
The calculator uses the formula:
Where:
Explanation: The calculator amortizes your loan both with and without extra payments to determine the interest savings and time reduction.
Details: Making extra payments toward your mortgage principal can save thousands of dollars in interest and help you build equity faster. Even small additional payments can have a significant impact over time.
Tips: Enter your loan amount, interest rate, loan term, and the amount you plan to pay extra each month. All values must be positive numbers.
Q1: How much should I pay extra each month?
A: Even small amounts like $50-100 per month can make a significant difference over the life of your loan.
Q2: Should I make extra payments or invest the money?
A: This depends on your mortgage interest rate versus potential investment returns. Generally, if your mortgage rate is higher than expected investment returns, paying down your mortgage may be better.
Q3: Are there any penalties for making extra payments?
A: Most mortgages allow extra payments, but some may have prepayment penalties. Check your loan agreement.
Q4: How often should I make extra payments?
A: Consistency is key. Regular monthly extra payments have the greatest impact, but even occasional lump sum payments can help.
Q5: Will extra payments reduce my monthly payment?
A: No, extra payments reduce your principal balance and loan term, but your regular monthly payment amount remains the same.