Mortgage Overpayment Calculator
See how extra payments can save you thousands and shorten your mortgage term
Tip: Even small regular overpayments can significantly reduce your total interest paid.
Overpayment Options
Advanced Options
Overpayment Savings Summary
Original Plan
Monthly Payment:
Total Interest:
Payoff Date:
Total Cost:
With Overpayments
New Monthly Payment:
Interest Saved:
Early Payoff:
Total Savings:
Detailed Savings
Time Saved:
Total Overpaid:
Effective ROI on Overpayments:
New Loan Term:
Recommendation:
How Mortgage Overpayments Work
Making extra payments toward your mortgage principal can dramatically reduce both your loan term and total interest paid. This calculator shows exactly how much you can save with different overpayment strategies.
The Power of Principal Reduction
When you make an overpayment, the entire amount goes toward reducing your principal balance. This creates a compounding effect:
- Small overpayments create big savings: An extra $100/month on a $300,000 mortgage could save ~$30,000 in interest
- Early overpayments have maximum impact: Dollar-for-dollar, payments in the first 5 years save the most interest
- Two strategic approaches: Reduce your loan term (save more) or reduce future payments (more flexibility)
Real-World Example
A $250,000 mortgage at 4% for 30 years:
- No overpayments: $179,674 total interest
- $200/month extra: Saves $51,872 interest, pays off 8 years early
- $500/month extra: Saves $92,371 interest, pays off 14 years early
Frequently Asked Questions
Should I reduce my term or my monthly payment?
Reducing the term saves more money overall by eliminating payments faster. Reducing monthly payments gives you more cash flow flexibility. Choose based on your financial goals - maximizing savings or maintaining payment flexibility.
Are there penalties for overpaying my mortgage?
Most US mortgages allow overpayments without penalty, but some loans (particularly fixed-rate deals in other countries) may have limits. Check your mortgage agreement for "prepayment penalty" clauses. In the US, conventional loans typically allow you to pay up to 20% extra annually without fees.
Is it better to overpay monthly or make lump sums?
Regular monthly overpayments create consistent savings, while lump sums (like tax refunds or bonuses) can make big dents in your principal. The calculator shows you can combine both strategies for maximum impact. Earlier lump sums provide the most benefit.
Should I pay off my mortgage or invest extra money?
This depends on your mortgage rate vs. expected investment returns. As a rule of thumb: if your mortgage rate is higher than what you'd expect to earn after taxes on investments, prioritize overpayments. If you can reliably earn more by investing, that may be better. This calculator's ROI figure helps with this comparison.
How do I actually make an overpayment?
Contact your lender to ensure extra payments are applied to principal (not future payments). Methods vary but may include: writing "principal only" on checks, using online payment portals with overpayment options, or setting up automatic biweekly payments (which results in one extra monthly payment per year).