Real Estate
Extra mortgage payments: how they can save interest
See how additional principal payments can shorten a mortgage and reduce lifetime interest.
An additional payment saves interest only when it is applied to principal. Lower principal means later interest is calculated from a smaller balance.
For a $2,000,000 mortgage at 9% over 240 months:
| Scenario | Effective term | Estimated interest |
|---|---|---|
| Base payment of $17,994.52 | 240 months | $2,318,684.59 |
| Plus $2,000 monthly | 186 months | $1,711,832.41 |
The model saves 54 months and approximately $606,852.18 in interest. Actual results depend on timing, contractual allocation and fees.
Before paying extra, ask whether prepayment is permitted, whether a charge applies, how the payment is credited and whether the lender will reduce the term or recast the payment. Keep confirmation showing the new principal balance.
Simulate the change in the mortgage calculator.