1. What is Mortgage Amortization?

Mortgage amortization is the process of paying off a loan over time through regular payments. Each payment covers both interest and principal, with the interest portion decreasing and principal portion increasing over the loan term.

2. How Does Paying Extra Help?

Making extra payments toward your mortgage principal can significantly reduce both the total interest paid and the loan term. Even small additional amounts can lead to substantial savings over time.

Key Benefits:

• Reduces total interest paid
• Shortens loan term
• Builds equity faster
• Provides financial flexibility sooner

3. Understanding the Results

Balance Reduction: The total amount saved on your loan balance by making extra payments.

Interest Savings: The difference in total interest paid between the regular and extra payment scenarios.

Time Saved: How many months sooner the loan will be paid off with the extra payments.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, and term. Then specify any additional monthly payment you plan to make. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much extra should I pay each month?
A: Even $50-100 extra can make a difference. Consider what fits your budget while maintaining emergency savings.

Q2: Is it better to pay extra monthly or make lump sum payments?
A: Monthly extra payments have a greater impact due to compounding, but lump sums when possible are also beneficial.

Q3: Should I pay extra or invest the money instead?
A: This depends on your mortgage rate vs. expected investment returns and your risk tolerance.

Q4: Do all mortgages allow extra payments?
A: Most do, but some may have prepayment penalties. Check your loan terms.

Q5: How does extra payment affect amortization?
A: Extra payments reduce principal faster, which reduces future interest calculations and shortens the loan term.