Discover how much time and interest you can save with our additional principal payment mortgage calculator. Even a small extra payment applied directly to your principal each month can shave years off your loan term and save thousands in interest.
Additional Principal Payment Calculator
Additional Principal Payment Mortgage Calculator Formula
This calculator runs an amortization loop twice: once for your standard schedule and once with the extra payments included. It tracks the declining principal balance month-by-month.
Variables
- Total Monthly Payment: Your required P&I payment plus your additional principal amount.
- Monthly Rate: Annual Interest Rate divided by 12.
- Principal Reduction: The portion of payment that lowers the loan balance.
Related Calculators
- Mortgage Payoff Calculator
- Bi-Weekly Payment Calculator
- Amortization Schedule Calculator
- Refinance Breakeven Calculator
What is an Additional Principal Payment?
An additional principal payment is any amount you pay over and above your required monthly mortgage bill, designated specifically to reduce the loan balance. Using an additional principal payment mortgage calculator allows you to visualize how these small, consistent contributions snowball into massive savings.
Because mortgage interest is calculated on your outstanding balance, lowering that balance faster means you pay less interest in every subsequent month. This creates a compounding saving effect that shortens your loan term significantly.
How to Calculate Additional Principal Savings (Example)
- Establish Baseline: Enter your current balance ($200,000), rate (6%), and remaining years (25). The calculator finds your required payment (~$1,288).
- Add Extra: Input an extra $100 per month.
- Recalculate: The calculator applies $1,388/mo to the balance.
- Result: You might find that you pay off the loan 4 years early and save over $25,000 in interest.
Frequently Asked Questions (FAQ)
No. On a standard fixed-rate mortgage, your required monthly payment remains the same. However, the number of payments you have to make decreases.
Most modern conforming mortgages do not have prepayment penalties, but you should always check your specific loan documents or ask your servicer to be sure.
It depends on your interest rate versus expected investment returns. If your mortgage rate is high (e.g., 7%), paying extra is a guaranteed 7% return. If it’s low (e.g., 3%), investing might yield more.
When making the payment, specify clearly (often via a checkbox on your online portal or a note on the check) that the excess funds are for “Principal Only.”