Mortgage Payoff Comparison

On a $300,000 30-year loan at 6.5%, adding just $200/month to principal cuts the payoff time by about 5.5 years and saves roughly $73,000 in interest. The earlier in the loan you start, the more you save, because more of each early payment goes to interest. The calculator shows side-by-side amortization so you can pick the right extra-payment amount.

A lump-sum at the end of each year saves slightly less than the same dollar amount split across 12 monthly extras, because the principal drops sooner with monthly payments. The difference is small - usually a few hundred dollars over the life of the loan - so pick whatever you can stick with. Even an annual lump sum from a tax refund is far better than nothing.

Compare your mortgage rate (after the mortgage interest deduction, if you itemize) to your expected after-tax investment return. If you can earn 7% in a diversified portfolio and your mortgage rate is 4%, investing wins on expected value. But paying down debt is a guaranteed return with no volatility - many people value that peace of mind. Use the Debt Payoff vs. Invest tool to model your situation.

Most US conforming residential mortgages issued after 2014 cannot charge prepayment penalties, but some non-qualified mortgages, jumbo loans, and older loans still do. Check the Note and Truth-in-Lending disclosure for any "prepayment penalty" clause before making a large extra payment. When permitted, penalties are typically capped at 2% of the balance in years 1–2 and 1% in year 3.