💵 Lump Sum Payment Calculator
See how one-time extra payments impact your mortgage payoff timeline and interest savings
How This Calculator Works
Extra principal payments reduce your loan balance, which reduces future interest charges since interest is calculated on the remaining balance. Every dollar of extra principal saves you multiple dollars in interest over the loan life. The calculator recalculates your amortization schedule with the extra payment, showing new payoff date, total interest saved, and months saved.
The impact is exponential - extra payments made early in the loan save dramatically more than payments made later because they reduce the balance that compounds interest for many years. A $10k extra payment in year 1 might save $30k in interest over 30 years, while the same payment in year 20 saves only $5k.
Example Calculation
Example: $20,000 Lump Sum on $240k Mortgage
Original Loan: $240k at 6.75%, 30 years. Monthly payment: $1,556. Total interest over 30 years: $320,160.
With $20k Extra in Year 1: New balance $220k. Same $1,556 payment. Payoff: 24 years (72 months early). Total interest: $252,890. Savings: $67,270 in interest, 6 years earlier freedom.
Alternative - Add $100/Month: $240k loan, add $100/month. Payoff: 24.5 years. Interest saved: $64,200. Similar result to $20k lump sum but spread over time.
Common Questions
Should I make extra payments or invest the money?
If mortgage rate is 6.75%, extra payments "earn" guaranteed 6.75% return (the interest you avoid). Stock market averages 7-10% but with volatility risk. General rule: Pay off high-rate mortgages (7%+). For low rates (3-4%), invest instead. For mid-rates (5-7%), it depends on your risk tolerance and other financial goals. Having a paid-off home provides psychological security that investments don't.
Is it better to make one big payment or monthly extra payments?
Mathematically equivalent if total amounts match. $10k lump sum today = $277/month for 3 years in total savings. However, monthly payments build discipline and ensure you don't spend the money elsewhere. Lump sum works if you have a windfall (bonus, inheritance, tax refund). Best strategy: Make extra monthly payments AND apply windfalls when they occur.