How much will I save by making extra principal payments?
The answer depends on :
- The balance of the loan
- The loan's interest rate
- The payments remaining
- And the additional amount paid
This amortization schedule will let you know what making extra payments will save you for your circumstances. The payment schedule supports:
- one "lump-sum" extra payment
- a specific number of extra payments
- extra payments until you've paid off the loan
- extra payments at a different frequency and on different dates than the "normal payment"
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An extra payment example
Assume you have a $400,000 at a 3.5% rate. Finding out how much you'll save if you make just an extra $100 payment until you've paid off the loan is easy. The amortization schedule will answer the question whether you've just taken out the loan or if the loan is one you've paid on for a while.
Set the calculator up this way:
- Loan Amount/Current Balance: 400,000.00
- Number of Payments (#): 360
- Annual Interest Rate: 3.25%
- Periodic Payment Amount: 1,740.83
- Extra Amount to Pay: 100.00
- Extra Payments Start: <as appropriate>
- Extra Payment Frequency: Monthly
- Number of Extra Pmts (#): Unknown
Notes:
- The calculator will calculate the regular periodic payment for you if you enter a "0". If you know the amount, you can enter it, and the payment schedule will use it.
- If you want to calculate the interest, you'll save on an existing loan start by entering the loan's current balance and the number of remaining payments.
- Assume you've received a large bonus, and you want to calculate the impact of making a single, lump-sum payment. To find out, change "Unknown" to "1" in step 8.
- Like all calculators on this site, this one is very flexible. The frequency of additional payments does not need to be the same frequency as the scheduled payments. The extra payments also do not need to fall on the same date as the normal payments.
The amortization schedule
Study the payment schedule. Notice when there is an additional payment, the calculator uses 100% of the amount to reduce the balance. This is the case even when you make the extra payment between the scheduled payment dates. If you are making extra payments, you will want to use this calculator to verify that your lender applies the entire payment to principal. Some lenders do not do this
The amortization summary and interest saved
The amortization schedule's summary header clearly shows you the amount of interest you will save by making extra payments.
A note on terminology. Extra payments are not "extra." Therefore, this amortization calculator also uses the more appropriate term, prepaid principal, in the results area and schedule.
Help with Amortization and Extra Payments
The accelerated payment calculator will calculate the effect of making extra principal payments. A minimal extra principal payment made along with a regular payment can save the borrower a large amount of interest over a loan's life, particularly if those payments start when the debt is relatively new.
For example, assume that you have taken out a loan for $260,386 for 360 monthly periods with an annual interest rate of 4.25%. If with the six months after the start date, you pay an extra $200, you will save over $50,000 in interest payments, and the schedule shows us that you'll have paid off the loan in 272 payments instead of the original 360 payments.
It is straightforward to calculate many different scenarios quickly. Note that the higher the interest rate, the greater the savings for any extra payment amount. Also, for a standard amortizing loan, the interest savings will be more significant the sooner the additional payments start. That is, you will save a lot more in interest if you pay an extra $50 a month for the last 20 years than if you pay an extra $100 a month for the previous ten years.
As with many of our other calculators, this calculator will also solve for an unknown input. For example, if you want the calculator to calculate the regular monthly payment, enter '0' (zero) for the "Periodic Payment Amount" and a non-zero value for "Loan Amount/Current Balance," "Number of Payments," and "Annual Interest Rate."
If you do not enter a '0' value, the calculator will use your inputs. This allows you to use any payment amount that you need.
Pamela Jaquish Miller says:
Me again. I have a mortgage and am using this amortization calculator to find out what the mortgagee owes to date. She has paid for many years but in 2020 she and her husband each made a payment on her account, bringing the balance down as I applied the extra mortgage payment to principal only. Now she is still making the double payments but she got a bonus at work and I am going to apply this to principal also. It will be $2040 extra. Where would I put that on this chart so that she would get credit for it? Thank you so much for your answers. I have learned everything about amortizing things from your charts and your help. Pam
Karl says:
What you want to do can’t be done with the calculator you are using.
Please use this loan payoff calculator. If you use the suggested calculator to can enter payments for any amount that have been paid on any date.
Pam Jaquish Miller says:
Thank you so much Karl. I always appreciate your help. I know you do this to help people, but is there any way I can send you money to repay you? Use it for Starbucks on the way to work? I would have to pay if I bought a program and it wouldn’t be as thorough as yours, nor could I ask it questions. If so, please email me at the address below and tell me if you have Paypal or Venmo. Thanks again for bailing me out, Pam
Karl says:
You’re welcome, Pam. I appreciate the offer of monetary support. It’s really not necessary. What would help me, even more, would be spreading the word about the site. If for example, you are on either LinkedIn or FB and you belong to a professional group that would benefit from these calculators, a mention from you would be worth its weight in gold. 🙂 Thanks for the offer.
Monica Ambs says:
HI Karl
I really like your calculator. I have accelerated my weekly mortgage payment so the payment is different. So I adjusted number of weekly payments to get the right weekly payment amount. Its not perfect but it gives me a view of were I am going and more incentive to pay off the mortgage faster. Every month is an improvement. Thank you for this calculator.
Monica
Karl says:
You’re welcome. Glad you are finding it useful.
If you want more accuracy, you can try this calculator on this site. It will allow the user to enter payments for any amount on any date. It will then create an amortization schedule.
DENISE says:
How can I add fixed monthly extra payments to the amort. calculator?
Karl says:
Did you see the "Extra Payment" tab at the top of the calculator? Click on it, and it asks you for the details. Fill those in.
Thenk click on the "Calcultor" tab, and "Amort Schedule."
Or am I misunderstanding something? If this doesn’t give you what you want, please explain.
Karl says:
For random extra payments, paid on any date, use the ultimate financial calculator.
For instructions, scroll down the page to the tutorials, and then pick tutorial #9 Random Extra Principal Payment.
Confused says:
Hi Karl: I tried to use this schedule for making extra payments at a different schedule than the regular payments, but I don’t see any place to put the payment frequency for the regular payments into the calculation.
Karl says:
You’re right, it doesn’t let the user set the payment frequency – monthly is assumed.
Here, please use this loan calculator. It support 12 or so payment frequencies and allows for extra payments as well.
If this still misses the mark, let me know what you need, and I’ll see what I can come up with.
Confused says:
Thank you, Karl. Will do.
Monica Ambs says:
Something has happened to the calculator. No matter what start date you put in it automatically defaults to a Saturday date. Can this be fixed. If I am using it I want it to reflect the exact date of my regular weekly payments.
Thank you
Monica
Karl says:
You are right. My earlier answer made no sense. It was meant for someone else’s question.
For finer control over dates, please use the extra payment feature that this loan calculator has.
Kim says:
We make additional payments on our mortgage so I used this calculator to determine how many years we have left. My question is if I put in my current payment not including the additional principal payment, does it account for taxes and insurance if that is not requested as information for the calculation?
Karl says:
No, it does not. This calculator considers only the details about the loan itself and not about escrow payments.
For a calculator that allows for extra payment on a mortgage which also allows for taxes and insurance, please use the Ultimate Mortgage Calculator.
Angela B. Shepherd says:
As a financial and tax advisor, I like these simple tools to show a client how to get out of debt more quickly. They are always amazed at how just a small extra principal payment monthly can reduce the total interest they will pay, but they get really excited when they hear the loan will be paid off a whole year early!
Karl says:
Thanks for your comment. I always thought of these calculators as educational tools. One can learn quite a bit by doing “what-ifs.”
Debra says:
Hello Karl,
As of July 2022, I should have $1000 per month to go toward my mortgage principal.
Let’s say 5 month time frame… I can borrow $5000 for flat fee of $250 which would be paid back
to lender $1000 a month for 5 months & plus $250. Would it be smarter to pay the $5000 lump sum on my mortgage principal or pay the $1000 a month on it ? Would I save enough on interest to
make paying the lump sum worthwhile ? My P&I $798.41, mortgage balance $143,786.54, 266 mo. remaining term. Would appreciate your input.
Karl says:
Hi Debra, I guess you want to know how to figure out which is the better option? The way I would approach the problem is to run 2 schedules keeping everything exactly the same except make one with 1 $5,000 extra payment and one with 5 $1,000 extra payments made in 5 consecutive months. Compare the "Interest Saved Due to Extra Payments" found in the header of each schedule. If the schedule with the single $5,000 extra payment saves you more than $250 over the other schedule, then it is better to borrow the $5,000. If not, then it’s not.
(Sorry I missed replying to this yesterday.)
Gary says:
I really enjoy you extra payment calculator, but I seem to be missing some understanding of how to use it. First, it always applies my first payment as principal for monthly payment. Second, the instructions say that I can set the payment date, but I don’t see anywhere to set payment date except for the extra payment. My regular monthly payment does not start on the 1st of the month. 1). How do I get my regular monthly payment to start on the 15th. I have no problem setting my extra payment date. 2). How do I get first payment to apply payment to interest and principal, not just principal?
Karl says:
You’re right. This calculator assumes the payment is due on the first. All is not lost, though.
Please use this loan calculator. It supports extra payments and allows users to set the initial payment date too.
Gary says:
Karl,
I sent you a reply via email so that I could attach a screenshot of my first payment issue. Thank you for new calculator pointer.
Karl says:
Hi Gary,
Thanks for the detail.
The loan closing date and the first payment date are the same. Therefore, there is no interest due, and thus the entire payment should be applied to the principal.
This can be a good thing for the borrower, as the total interest paid for the loan will be less than if the first payment came after the loan closing date.