What an extra mortgage payment actually saves you

The number that motivates people isn't the monthly payment — it's the interest they never have to pay at all.

Mortgage advice tends to arrive as a slogan: pay a little extra and you'll save a fortune. It is true, and unhelpfully vague. The useful version is specific to your balance, your rate and the amount you can actually spare — and the difference between "a bit extra" and "a bit more extra" is usually larger than people expect.

Why extra payments work so hard

Every payment you make is split between interest and principal. Early in a mortgage, the great majority goes to interest, because interest is charged on a balance that is still nearly the whole loan. An extra payment is different: it goes entirely against the principal. That reduces the balance every future interest calculation is based on, so the saving compounds for the remaining life of the loan.

This is also why extra payments made early are worth far more than the same amount paid later. Ten years in, the same money has fewer years left to compound over.

Step-by-step

1. Open the calculator. Go to Calculators and choose "Extra Payment".
2. Enter your current balance — what you owe now, not what you originally borrowed.
3. Enter the rate and the years remaining.
4. Add the extra you could pay monthly, plus any one-off lump sum.
5. Read the tiles. Interest saved, time saved, the new payoff date, and the totals with and without the extra.

Before you commit the money

• Check for prepayment penalties. Rare on modern mortgages, common enough historically to be worth confirming.
• Tell your lender where the money goes. An unexplained extra payment is sometimes applied to next month's instalment rather than the principal, which achieves almost nothing. Ask for it to be applied to principal.
• Compare against other uses. Overpaying a 6% mortgage is a guaranteed 6% return, which is excellent — but it ranks below clearing 22% credit card debt, and it is not obviously better than an employer pension match.
• Keep an emergency fund first. Money paid into a mortgage is very hard to get back out.

Frequently asked questions

Is this the same as biweekly payments?

Biweekly schedules work because 26 half-payments a year equal 13 monthly ones — one extra payment annually, arriving in disguise. You can model it here by entering one twelfth of a payment as your monthly extra.

Are my figures sent anywhere?

No. The calculation runs in your browser and nothing you enter leaves your device.

Is this financial advice?

No — it is arithmetic on the assumptions you supply. Whether overpaying is the right use of your money depends on circumstances a calculator cannot see.