This calculator allows you to enter an initial lump-sum extra payment along with extra monthly payments which coincide with your regular monthly payments. We also offer three other options you can consider for other additional payment scenarios.
If you’re a homeowner with a mortgage, you’ve probably wondered if making extra payments can help you pay off your loan faster and save money on interest. Specifically, you may be wondering if adding just $50 extra to your monthly mortgage payment can make a significant impact over the life of your loan
The short answer is yes – even an extra $50 per month can potentially shave years off your loan term and save you thousands in interest charges, Keep reading to understand exactly how paying a little extra each month can accelerate your payoff timeline and minimize the total interest you pay to your lender,
How Making Extra Payments Helps You Pay Off Your Mortgage Faster
When you make your regular monthly mortgage payment, most of that payment goes towards interest charges, with only a small portion going to pay down the principal balance. This is especially true in the early years of your loan.
By making an extra payment of even just $50 each month 100% of that $50 goes directly to reducing your outstanding principal balance. This helps you pay down your loan faster in two key ways
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You’re paying extra money towards principal every month, which chips away at your balance.
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Since your principal balance is lower each month after making the extra payment, you accrue less interest. This saves you money.
The combination of these two factors – paying down principal faster and reducing your interest expenses – can shave years off your payoff timeline.
For example, let’s look at a $200,000 mortgage with a 30 year term and 4% interest rate. The regular monthly payment would be around $955. By adding just $50 extra per month, you’d pay off your loan almost 3 years early and save over $16,000 in interest!
The savings and accelerated payoff schedule can be even more dramatic if you’re able to contribute $100, $200 or more extra each month. But even small amounts make a difference – which is great news if you’re looking for manageable ways to pay your mortgage off faster.
When to Start Making Extra Payments for the Biggest Impact
You’ll maximize your interest savings and the number of years you can shave off your loan term if you start making extra payments as soon as possible.
Paying extra in the early years of your mortgage not only directly pays down more principal, but also reduces the balance on which you pay interest during the remainder of your loan. This creates a cascading effect which saves you more and more as the years go on.
For example, let’s say you have a $250,000 30-year mortgage and you start paying $100 extra each month beginning:
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In Year 1 of your loan: You’d pay off your mortgage 6 years and 2 months early and save $35,755 in interest.
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In Year 5 of your loan: You’d pay off your mortgage 4 years and 7 months early and save $22,345 in interest.
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In Year 10 of your loan: You’d pay off your mortgage 3 years and 3 months early and save $13,456 in interest.
As you can see, the savings are much greater when you begin making extra payments in the first year of your loan. But no matter when you start, any extra amounts will positively impact your payoff timeline and interest costs.
Strategies to Come Up With an Extra $50 Per Month
If you want to start paying an additional $50 or more towards your mortgage principal each month, you’ll need to find room in your budget. Here are some strategies to free up extra cash:
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Cut discretionary spending: Take a close look at your daily latte purchases, restaurant meals, entertainment budgets, etc. Finding even small ways to scale back discretionary spending can free up mortgage payment money.
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Pause retirement contributions: Temporarily reducing 401(k) contributions by $50 to $100 per month can allow more cash flow to direct to extra mortgage payments (make sure to ramp up again later).
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Pause college savings: If you have several years before college bills come due, you may be able to temporarily reallocate college savings to make extra mortgage payments now (again, make sure to increase later).
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Take on a side gig: Driving for a rideshare company on weekends or using professional skills to freelance on the side can generate extra income that goes straight towards extra mortgage payments.
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Reduce energy costs: Steps like turning down the thermostat, installing LED light bulbs and adding insulation can help shrink utility bills and provide cash to put towards principal payments.
Is Paying $50 Extra Per Month Right for You?
While paying extra can be beneficial, it’s important to weigh this strategy against your other financial priorities:
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If you have high-interest debt like credit cards or personal loans, it usually makes more sense to pay those down first before putting extra cash into your lower-interest mortgage.
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Make sure you have an emergency fund of 3-6 months of living expenses before prioritizing extra mortgage payments.
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Be aware of early payoff penalties – some mortgages charge a penalty for paying off your loan too fast.
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Consider other goals like saving for retirement, education, etc. Make sure extra mortgage payments don’t compromise other important priorities.
Overall, paying just $50 extra per month can make a real dent in your payoff timeline and interest costs. If your budget allows, it can be one of the easiest and most effective ways to become mortgage free faster. Use a mortgage calculator to run the numbers and see the potential impact for your specific loan situation.
Want to Make Irregular Payments? Do You Need More Advanced Calculation Options?
- Biweekly Payment Method: Please see our bi-weekly mortgage calculator if you are using biweekly payments to make an effective 13th monthly payment.
- Extra Payments In The Middle of The Loan Term: If you start making extra payments in the middle of your loan then enter the current loan balance when you started making extra payments and set the loan term for however long you have left in the loan. For example, if you are 3.5 years into a 30-year home loan, you would set the loan term to 26.5 years and you would set the loan balance to whatever amount is shown on your statement. If you do not have a statement to see the current balance you can calculate the current balance so long as you know when the loan began, how much the loan was for & your rate of interest.
- Irregular Extra Payments: If you want to make irregular extra contributions or contributions which have a different periodicity than your regular payments try our advanced additional mortgage payments calculator which allows you to make multiple concurrent extra payments with varying frequencies along with other lump sum extra payments.
For your convenience current Los Angeles mortgage rates are published underneath the calculator to help you make accurate calculations reflecting current market conditions. Calculator Rates
| Home Price & Downpayment | Amount |
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| Home Price: | ($) |
| Down Payment: | ($) |
| Loan Amount: | ($) |
| Original Loan Structure | Amount |
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| Interest Rate: See Current Los Angeles Rates | (%) |
| Loan Term: | (Years) |
| Additional Payment | Amount |
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| Initial Extra Payment: | ($) |
| Additional Monthly Loan Payment: | ($) |
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Calculating Your Mortgage Overpayment Savings
Start Paying More Early & Save Big
Want to build your home equity quicker? Use this free calculator to see how even small extra payments will save you years of payments and thousands of Dollars of additional interest cost. Making extra payments early in the loan saves you much more money over the life of the loan as the extinguised principal is no longer accruing interest for the remainder of the loan. The earlier you begin paying extra the more money youll save.
Use the above mortgage over-payment calculator to determine your potential savings by making extra payments toward your mortgage. Put in any amount that you want, from $10 to $1,000, to find out what you can save over the life of your loan. The results can help you weigh your financial options to see if paying down your mortgage will have the most benefits or if you should focus your efforts on other investment options. As you nearly complete your mortgage payments early be sure to check if your loan has a prepayment penalty. If it does, you may want to leave a small balance until the prepayment penalty period expires.
Should You Make Extra Mortgage Principal Payments?
FAQ
Is it worth paying an extra $50 a month on a mortgage?
Paying a little extra towards your mortgage can go a long way. Making your normal monthly payments will pay down, or amortize, your loan. However, if it fits within your budget, paying extra toward your principal can be a great way to lessen the time it takes to repay your loans and the amount of interest you’ll pay.
What happens if I pay an extra $100 a month on my mortgage?
How do I pay off a 30-year mortgage in 10 years?
To pay off a 30-year mortgage in 10 years, you’ll need to make extra payments or increase your monthly payments. Making biweekly mortgage payments can also help you repay your loan faster (but probably not that quickly).
How many years will one extra mortgage payment take off?