What is the impact of additional principal payments on your mortgage


By making additional principal payments every month, you can reduce your interest payments significantly. You can also shorten the term of the loan. Use the MortgageCMP Calculator to see what is the impact of extra payments on the mortgage. You can download the app on your Android device from Google Play here.

This tutorial will show you how to assess the impact of extra principal payments quickly.


1. Add two mortgages: one with extra monthly principal payment of, say, $200, and one without. Leave all the other parameters identical. Give them different names to easily recognize later which is which.

2. Click the icon to see the list of mortgages you have added. You will see the view shown below. Mark the items you want to compare and click the Compare button.

3. When you swipe to the right you will see details about savings, loan term reductions, differences in monthly payments between the two mortgages.

In the first view you can see that thanks to the additional principal payments the mortgage term was reduced to 282 months from 360 (by 78 months which makes almost 6 and a half years).


The next view shows what savings you can make. It turns out the mortgage with extra $200 monthly will cost you $69 thousand less (in interest).


The third view shows how your total monthly payments will differ. It shows you clearly that due to monthly payments higher by $200 your mortgage will be paid off a few years earlier.

4. In the last slide you can see how you will be paying off the debts over years.

The top chart shows how much principal will be remaining to pay over years. For example, in 2030 you will still have around $125k to pay, with $200 extra monthly payments. Without the additional payments, you will still have around $190k outstanding loan.

The 2nd chart also shows that the total paid interest will be much higher without the additional payments.