How does paying extra on my mortgage save interest?

Extra payments reduce your loan principal early, so less interest accrues on top of it each month. A dollar paid off in year one saves far more interest than a dollar paid off in year twenty.

How much can extra mortgage payments actually save?

On a $500,000 mortgage at 6% interest with a $2,000 monthly payment, adding $433 extra per month saves $181,015 in interest and pays off the loan 98 months (over 8 years) early.

Is it better to overpay my mortgage or invest the money?

It depends on whether your expected investment return beats your mortgage rate. If your mortgage rate is higher than your likely after-tax return, overpaying is the safer, guaranteed saving.

Do extra mortgage payments go toward principal or interest?

Once your scheduled interest is covered, any extra payment goes straight to reducing the principal, which is what accelerates the payoff and cuts future interest.

What is a mortgage accelerator calculator?

A mortgage accelerator calculator shows how much interest and time you save by paying extra toward your mortgage principal. Enter your balance, rate, and payment, then add an extra amount to see the new payoff date and total interest saved.

Should I pay off my mortgage faster or invest the extra money instead?

It depends on your mortgage rate compared to your expected investment return. If your mortgage rate is higher than what you'd realistically earn investing, paying it down faster usually wins. If your expected investment return is higher, investing the difference can leave you further ahead, though it carries more risk than a guaranteed interest saving.

Mortgage Accelerator

This free tool calculates how much time and interest you save by adding a small extra payment to your mortgage. See exactly what a small change each month does to your loan, in your own numbers.

Logic Updated: April 2026

Mortgage Accelerator Calculator

Current Mortgage Balance ($)

Annual Interest Rate (%)

Monthly Principal & Interest Payment ($)

Extra Monthly Payment ($)

Additional amount paid towards principal each month.

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All calculations happen in your browser. No data is stored.

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What $200 extra every two weeks does

A couple with a $500,000 mortgage at 6% start paying an extra $200 every two weeks. That one change can knock years off the loan and save tens of thousands in interest, from the same income, just redirected sooner.

Why do extra mortgage payments matter?

Extra payments work because they hit the loan early, before more interest builds on top of it. A dollar paid off in year one is worth more than a dollar paid off in year twenty. Run your own numbers above to see what it does to your loan.

Common Questions

How do extra mortgage payments reduce interest?

Every extra dollar goes straight onto the principal, so it stops earning interest for the bank from that day forward. Pay it early in the loan and it saves interest for years to come. The earlier the extra payment, the bigger the long-term saving.

How much can I save by paying extra each month?

It depends on your balance, rate, and how early you start, but small regular amounts add up fast. An extra $200 a fortnight on a $500,000 mortgage at 6% can knock years off the loan and save tens of thousands in interest. Run your own numbers above to see your figure.

Is a lump sum or a regular extra payment better?

Both reduce the principal and save interest, so either works. A lump sum saves interest from the day it lands, while regular extra payments build the same effect gradually. The best choice usually comes down to what fits your cash flow.

Will my bank let me make extra mortgage payments?

Most banks allow some extra repayments on a variable rate loan without penalty, but fixed rate loans often cap how much you can pay above the minimum each year. Check your loan's terms or ask your bank before committing to a regular extra payment.

How soon should I start making extra payments?

As early as possible. A dollar paid off in year one saves more interest than a dollar paid off in year twenty, because it stops compounding sooner. Waiting even a few years to start reduces how much the strategy can save you.