The mechanism in one paragraph
Each month your interest charge is (rate ÷ 12) × current balance — the payment covers that charge first, principal absorbs the rest. An extra payment skips the interest line entirely and lands on the balance. Next month's interest is computed on a smaller number, so slightly more of your regular payment reaches principal too. The effect compounds monthly for the rest of the loan, which is why small extras produce five- and six-figure results.
What each extra amount buys ($300,000 @ 6.5%, 30-year)
| Extra / month | Payoff time | Time saved | Interest saved |
|---|---|---|---|
| $0 (baseline) | 30 yr 0 mo | — | — |
| $100 | 26 yr 0 mo | 4 yr 0 mo | $60,995 |
| $200 | 23 yr 1 mo | 6 yr 11 mo | $103,449 |
| $500 | 17 yr 6 mo | 12 yr 6 mo | $179,759 |
Notice the curve: the first $100 saves $60,995, but going from $200 to $500 doesn't triple the savings of $200. Early dollars matter most — they live on the schedule longest. That's also why a lump sum today beats the same total spread over next year (slightly).
Three mistakes that cancel the benefit
- Extras applied as "next month's payment." Some servicers hold extra money as a prepaid installment instead of reducing principal — which saves you nothing. Mark every extra as principal-only, and check the next statement.
- Accelerating the mortgage while carrying 22% credit-card debt. A dollar retires interest at the rate of the debt it lands on. Cards first (snowball calculator), then the house.
- Emptying the emergency fund. Home equity is illiquid — you can't un-pay the mortgage when the transmission dies. Extras should come from surplus, not your safety net.
Extra monthly vs. biweekly vs. recasting
- Extra monthly — flexible, stoppable anytime. What this guide models.
- Biweekly payments — half a payment every two weeks = 13 payments/year, mechanically the same as adding 1/12 of your payment monthly. Skip paid programs; see the biweekly calculator and its DIY note.
- Recasting — a lump sum plus a small servicer fee re-amortizes the loan to LOWER the required payment (same end date). Choose it when cash-flow relief, not an earlier payoff, is the goal.
Does paying extra beat investing?
Prepaying a 6.5% mortgage is a guaranteed, tax-free 6.5% return. Markets have historically beaten that over long horizons — without a guarantee. The defensible order most planners suggest: employer 401(k) match → high-interest debt → emergency fund → then split extra cash between the mortgage and investing according to how much you value certainty. We compute the mortgage side precisely in the mortgage payoff calculator (works for the loan you already have); the investing side is a personal call, not a math fact.