Where every dollar of a mortgage payment goes
Extra principal: what it changes and what it does not
In one paragraph
Extra principal lowers the balance sooner, so every later month accrues less interest and the loan ends early. Your required payment usually does not change. Before paying extra, confirm the loan has no prepayment penalty, mark the money for principal, and make sure emergency savings and higher-cost debts are handled first.
Last reviewed against the primary sources listed below.
What changes and what does not
| Changes | Stays the same |
|---|---|
| Payoff date moves earlier | Required monthly payment, unless you recast |
| Total interest falls | Interest rate |
| Equity builds faster | Escrow amounts |
Checks before you start
- Ask about any prepayment penalty.
- Label the extra as principal so it is not held as an early payment.
- Keep an emergency fund; extra principal is hard to get back.
How much extra, and how fast it works
There is no right amount. One extra payment a year, a fixed monthly amount, or a windfall each shorten the loan; how much depends on balance, rate and timing. Slide the amount in the schedule tool and watch the payoff date move.
Common questions about interest
Is paying additional principal a good idea?
It cuts interest and shortens the loan, and it works best once emergency savings and higher-cost debts are handled. Check for a prepayment penalty first.
How much extra principal should I pay?
Whatever you can sustain without draining savings. Use the schedule slider with your own balance to see the effect of different amounts.
How many years can 1 extra principal a year shorten my loan?
It depends on your balance, rate and remaining term. Enter your loan in the schedule tool and set the monthly extra to one twelfth of a payment to see it.
How to cut 5 years off a 15 year mortgage?
Use the schedule tool: enter your balance, rate and months left, then raise the extra amount until the payoff date moves five years earlier.