On most fixed-rate mortgages, extra money paid toward principal reduces the balance, so less interest builds up afterward.
An example
On a $250,000 balance at 7% with 30 years left, adding $200 a month pays the loan off years early and saves a large amount of interest. The calculator shows the exact figures for your loan.
Before you prepay
- Keep an emergency fund first.
- Higher-interest debt usually comes first.
- Check that your loan has no prepayment penalty.
- Tell the servicer the extra amount is for principal.
Our extra payment calculator shows the months and interest saved.
General information, not legal, tax or financial advice.
This article is general information, not legal, tax or regulatory advice. Rules change; confirm current requirements with the responsible agency or a licensed professional.
