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

FAQs

How much will 200 extra mortgage payments save me? ›

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.

Throwing in an extra $500 or $1,000 every month won't necessarily help you pay off your mortgage more quickly. Unless you specify that the additional money you're paying is meant to be applied to your principal balance, the lender may use it to pay down interest for the next scheduled payment.

Increasing your monthly payments, making bi-weekly payments, and making extra principal payments can help accelerate mortgage payoff. Cutting expenses, increasing income, and using windfalls to make lump sum payments can help pay off the mortgage faster.

By making two extra mortgage payments a year, you're prepaying principal that would otherwise accrue interest over the life of the loan. Plus, those payments are accelerating repayment because they're payments you would have made anyway.

Overpaying your mortgage could help you cut your loan-to-value (LTV). This is the proportion of your property price covered by your mortgage. It goes down if your property value goes up and as you pay off more of your mortgage. That's why overpaying can help bring it down.

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.

Instead of putting extra money toward your mortgage, it might be wiser to contribute more in your retirement accounts. If you buy a $300,000 house with a 30-year mortgage and a 5.7% interest rate, you could save $84,223 in interest by paying an extra $200 every month — and pay off your mortgage 6.67 years sooner.

When you pay an extra $100 on your monthly mortgage payment, that entire amount goes to principal. You'll reduce your total balance much more quickly when you make an extra payment that goes directly to repaying your balance. You could cut around four years off your repayment time with just an extra $100 per month.

When you make an additional payment, you have the option to apply it toward your loan's principal. This will gradually chip away at your loan balance and could ultimately reduce the amount of interest you pay over time. As your loan balance decreases, the amount of interest added to each payment also drops.

You have high-interest debt.

Rather than make extra payments toward your mortgage principal, consider paying down high-interest debt first. This can include credit card, student loan, medical, and car loan debt, just to name a few.

What happens if I pay an extra $300 a month on my 30-year mortgage? ›

As you can see, the principal balance of the mortgage decreases by more than the extra $300 paid each month. For example, if you pay an extra $300 each month for 24 months at the start of a 30-year mortgage, the extra amount by which the principal balance is reduced is greater than $7,200 (or $300 × 24).

When you pay an extra $100 on your monthly mortgage payment, that entire amount goes to principal. You'll reduce your total balance much more quickly when you make an extra payment that goes directly to repaying your balance. You could cut around four years off your repayment time with just an extra $100 per month.

Making additional principal payments will shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you'll have fewer total payments to make, in-turn leading to more savings.