The scenario, and what changes
Take a $350,000 loan at 6.5% on a 30-year fixed term. Left alone, the payment is $2,212.24 a month, it runs the full 30 yr, and the interest comes to $446,404 — more than the loan itself.
Now send $200 extra with every payment. Nothing is refinanced and the rate does not change; the money simply goes to principal. Your outlay becomes $2,412.24 a month, the loan is gone in 23 yr 10 mo instead of 30 yr, and total interest falls to $338,308.
That is $108,096 you never pay and 6 yr 2 mo of payments you never make. The price is $2,400 a year — and because the loan ends early, you only make those extra payments for 23 yr 10 mo, putting in $57,200 in total. Roughly two dollars of interest avoided for every dollar of principal added.
What each extra dollar buys
The relationship is not linear. Doubling the extra payment does not double the saving, because each additional dollar is fighting a smaller remaining balance than the one before it.
| Extra / month | Total monthly | Payoff time | Total interest | Interest saved |
|---|---|---|---|---|
| $0 | $2,212.24 | 30 yr | $446,404 | $0 |
| $100 | $2,312.24 | 26 yr 6 mo | $383,777 | $62,627 |
| $200 | $2,412.24 | 23 yr 10 mo | $338,308 | $108,096 |
| $300 | $2,512.24 | 21 yr 9 mo | $303,411 | $142,993 |
| $500 | $2,712.24 | 18 yr 7 mo | $252,803 | $193,601 |
The first increment is the most productive one. That matters if you are deciding between a comfortable amount you can sustain and an ambitious amount you might abandon in eight months: a smaller payment you actually keep making beats a larger one you stop.
Why the early years do the heavy lifting
At 6.5%, almost the entire first scheduled payment is interest. Principal is what the lender charges you interest on, so a dollar removed from the balance today cancels every future interest charge that dollar would have produced for the remaining 30 yr. A dollar removed in year 25 cancels five years of charges. Same dollar, very different effect.
This is why the gap between the two loans widens rather than staying flat. Each extra payment lowers the balance, the lower balance accrues less interest, and more of the next scheduled payment goes to principal — which lowers the balance further.
Where the balance actually stands
| Year | No extra payment | +$200 / month | Difference |
|---|---|---|---|
| Year 5 | $327,638 | $313,503 | $14,135 |
| Year 10 | $296,716 | $263,035 | $33,681 |
| Year 15 | $253,956 | $193,247 | $60,709 |
| Year 20 | $194,827 | $96,743 | $98,084 |
| Year 25 | $113,063 | Paid off | $113,063 |
Read down the difference column rather than across any single row. The gap does not grow in a straight line — it accelerates, which is the whole argument for starting early rather than waiting until the payment feels affordable.
What this does not tell you
The extra payment does not lower your required monthly payment. A fixed-rate mortgage payment is set at closing; prepaying shortens the loan but leaves the obligation unchanged. If your goal is breathing room in the monthly budget, this is the wrong tool — that takes a refinance or a recast.
It also does not account for what else that $200 could do. Paying down a mortgage is a guaranteed return equal to your interest rate, which is genuinely attractive, but higher-rate debt and an employer retirement match both beat it on the arithmetic alone. And money in the house is not money you can reach in an emergency without borrowing it back.
Nor does it model taxes, mortgage insurance dropping off as equity builds, or the fact that inflation quietly makes a fixed payment cheaper every year. Those all cut in different directions and none of them is in the table above.
If you decide to do it
Tell your servicer the money is a principal-only payment. Many will otherwise apply an overpayment to next month’s bill or park it in suspense, and an extra payment applied the wrong way does none of what this page describes. Most online portals have a separate field for it; if yours does not, call and ask.
Then check your note for a prepayment penalty. Most US residential mortgages written today have none, but they still exist, and where they do they usually apply only in the first few years.
Your loan is not this loan. Change the balance, the rate, the term or the extra payment in the amortization calculator, preloaded with this scenario, and every figure on this page recalculates for your numbers.