Is it better to pay extra on a mortgage or invest the money?

If your mortgage rate is below 6%, historically investing in broad index funds (S&P 500 long-run average ~7–10%) beats paying off the mortgage. Above 6–7%, the math is close — paying off is a guaranteed risk-free return equal to your rate. Most financial planners suggest a split: max retirement accounts first (401k match, IRA), then consider extra mortgage payments.

What happens if I pay an extra $500 a month on my mortgage?

On a $350,000 mortgage at 6.5% with 25 years left, adding $500/month saves roughly $90,000 in interest and pays the loan off about 8 years early. The effect is largest in the early years when most of your payment is interest.

Does a lump-sum payment reduce monthly payments?

For a conventional fixed mortgage, a lump-sum payment reduces the balance but does NOT automatically lower your monthly payment — it shortens the remaining term instead. To lower your payment, you need to recast (reamortize) the loan, which most lenders offer for a small fee ($150–$500).

What is the biweekly mortgage payment trick?

Paying half your monthly payment every two weeks results in 26 half-payments per year = 13 full payments instead of 12 — effectively one extra payment annually. On a $300,000 30-year loan at 7%, this typically saves ~$44,000 and cuts 4–5 years. Use our calculator to model this by entering your half-payment amount × 2 as an extra monthly payment.

Mortgage Payoff Calculator — Extra Payment Savings | KalkWise

	Original	With extra
Monthly payment	$2,160.66	$2,360.66
Total interest	$328,199	$259,117
Payoff date	June 2051	December 2046
Time remaining	25 yrs	20.5 yrs
You save		$69,082

By the KalkWise Editorial Team Reviewed for accuracy Updated June 2026

What is the mortgage payoff calculator — extra payment savings?

In short

Adding $200/month to a $320,000 mortgage at 6.5% with 25 years remaining saves $47,000 in interest and pays the loan off 4.2 years early. The formula: new payoff months n = −ln(1 − r·B / (M + E)) / ln(1 + r), where M is the standard payment, E is the extra amount, B is the balance, and r is the monthly rate.

This mortgage payoff calculator shows how much interest you save — and how many years you cut — by adding extra monthly payments or a one-time lump sum to your mortgage. Enter your current balance, rate, and months remaining, then try different extra-payment amounts to see the impact.

How to use this calculator

1Enter your current remaining loan balance (check your latest mortgage statement).
2Enter your interest rate and how many months remain on your loan.
3Add an extra monthly payment — even $100/month makes a significant difference.
4Optionally enter a one-time lump sum (bonus, tax refund) applied immediately to principal.
5Read the interest saved, years saved, and new payoff date.

The formula

M=P×r(1+r)n(1+r)n−1

extra payment:n_new=−ln(1−r·BM+E)ln(1+r)

Standard payment M = P·r·(1+r)^n / ((1+r)^n − 1). New payoff months with extra E: n_new = −ln(1 − r·B / (M+E)) / ln(1+r). Interest saved = total interest original − total interest with extra.

M: — Standard monthly P&I payment
E: — Extra monthly payment amount
P / B: — Original loan amount / current remaining balance
r: — Monthly interest rate (annual rate ÷ 12 ÷ 100)
n: — Original months remaining
n_new: — New months to payoff with extra payment

The one-time lump sum is applied to the principal balance immediately, which also slightly reduces the required monthly payment — but the calculator keeps the payment the same and directs the savings toward an even earlier payoff.

Worked example

The scenario

$320,000 balance, 6.5% rate, 300 months (25 years) remaining, $200/month extra.

gives

The result

Standard payment: $2,137/month. Total interest without extra: $321,000. With $200 extra: total interest $274,000 — saving $47,000 and paying off 50 months (4.2 years) early.

Common use cases

Deciding whether to make extra mortgage payments vs investing the difference
Planning a lump-sum paydown with a work bonus or inheritance
Seeing the interest impact before choosing a biweekly payment plan
Calculating how many extra payments are needed to pay off by a target date

Limitations & assumptions

Assumes a fixed interest rate — adjustable-rate mortgages (ARMs) will have different outcomes after the fixed period.
Does not account for prepayment penalties — check your loan agreement before making large extra payments.
Results are for the principal & interest portion only; property tax, insurance, and PMI are not included.

Frequently asked questions

On a $300,000 30-year mortgage at 7%, making one extra payment per year (≈ $2,000) saves approximately $45,000 in interest and cuts 4–5 years off the loan. The earlier in the loan term you start, the more you save.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.

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