Use remaining balance, current rate, remaining term, and scheduled principal-and-interest payment.
$
Loan amount: $320,000
%
yrs
$
Your accelerator — every dollar attacks the principal directly.
Standard Payment
$0
Principal & interest / mo
New Payment
$0
With extra payment
Interest Saved
$0
Over the life of the loan
Time Saved
0 mo
Off your payoff date
Loan Balance Over Time
Standard
With Extra
My Mortgage Payoff Plan — Financial Depth
financialdepth.com/early-mortgage-payoff
Quick Summary (TL;DR)
- Every extra dollar goes 100% to principal, cutting both total interest and years off the loan.
- Paying extra is a guaranteed, risk-free return equal to your mortgage rate.
- Example: $320k at 6.5% over 30 yrs + $300/mo → paid off in ~24 yrs, saving ~$110k in interest.
- Formula:
M = P · r(1+r)n ÷ ((1+r)n − 1)
How Overpaying Your Mortgage Accelerates FIRE
For the FIRE community, a mortgage is often the single largest expense standing between you and financial independence. Your monthly payment is fixed by an amortization formula, but the split between interest and principal is not. In the early years, most of every payment is interest. An extra payment skips that split entirely — it goes 100% to principal, immediately reducing the balance that all future interest is charged against. That's why a modest, consistent overpayment can erase years from the loan and tens of thousands in interest.
The standard monthly payment is calculated with M = P · [ r(1+r)n ] / [ (1+r)n − 1 ], where P is the loan principal, r is the monthly interest rate (APR ÷ 12), and n is the number of monthly payments. This simulator computes that baseline, then runs a full month-by-month schedule with your extra payment added on top to find the new payoff date and total interest. The difference between the two is what you keep.
Worked example: On a $320,000 loan at 6.5% over 30 years, the standard payment is about $2,023/month and you'd pay roughly $408,000 in interest. Add just $300/month and you pay the loan off in about 24 years instead of 30, saving close to $110,000 in interest — and you free up the full payment six years early, which can be redirected straight into your investment portfolio.
How much does each extra payment buy you?
Reference loan: $320,000 at 6.5% over 30 years (standard principal & interest $2,023/mo, $408,142 total interest). Every figure below is produced by the same month-by-month amortization engine that powers the calculator above — change the inputs to model your own loan.
| Extra / month | Paid off in | Time cut | Interest saved |
|---|---|---|---|
| $100 | 26 yr 2 mo | 3 yr 10 mo | $61,698 |
| $200 | 23 yr 5 mo | 6 yr 7 mo | $105,429 |
| $300 | 21 yr 2 mo | 8 yr 10 mo | $138,446 |
| $500 | 18 yr 0 mo | 12 yr 0 mo | $185,552 |
| $1,000 | 13 yr 2 mo | 16 yr 10 mo | $251,400 |
Notice the returns are front-loaded but not linear: the first $100/mo saves ~$62k, but doubling to $200 does not double the saving. Each added dollar attacks a smaller remaining balance.
Overpay, or invest the difference?
This is the question generic payoff calculators skip. Here both strategies commit the identical $2,023 + $300 every month for the full 30 years. Accelerate‑then‑invest throws the extra $300 at the mortgage until it clears (year 21 yr 2 mo), then invests the entire freed payment. Invest‑alongside keeps the normal mortgage and invests $300/mo the whole time. Both finish with a paid‑off house at year 30 — the table shows the investment pot each leaves you at that point.
| Investment return | Accelerate then invest | Invest alongside | Winner |
|---|---|---|---|
| 4% | $293,747 | $205,581 | Pay down (+$88k) |
| 5% | $307,144 | $244,613 | Pay down (+$63k) |
| 6% | $321,203 | $292,354 | Pay down (+$29k) |
| 7% | $335,955 | $350,836 | Invest (+$15k) |
| 8% | $351,433 | $422,565 | Invest (+$71k) |
The crossover sits between 6% and 7%. Below your mortgage rate of 6.5%, guaranteed debt payoff wins; clearly above it, the market is expected to win — but only expected, with sequence and tax risk the payoff route does not carry. Returns here are nominal and pre-tax; a taxable brokerage tilts the maths further toward payoff.
Frequently Asked Questions
Does paying extra on my mortgage really help me reach FIRE faster?+
Yes. Every extra dollar goes straight to principal, which shrinks the balance that future interest is charged on. This compounds over time, often eliminating years of payments and tens of thousands in interest — and once the loan is gone, your entire former payment becomes free cash flow, a core lever for early retirement.
Should I overpay my mortgage or invest the money instead?+
It depends on your mortgage rate versus expected investment returns and your risk tolerance. Overpaying gives a guaranteed, tax-free return equal to your interest rate; investing may earn more but carries market risk. A low rate usually favours investing, while a high rate favours paying down debt. Many in the FIRE community do a bit of both.
How is the interest saved calculated?+
The simulator builds a full month-by-month amortization schedule for both scenarios — the standard payment, and the standard payment plus your extra amount. It sums the interest portion of every payment in each, and the difference between the two totals is your interest saved.
At what interest rate does paying down beat investing?+
There is no single number, but the break-even is roughly your mortgage rate. On the reference loan at 6.5%, paying down wins the head-to-head at any expected return up to about 6%, and investing pulls ahead only from around 7% upward — and even then the payoff route's edge is that its return is guaranteed and tax-free, while the investment edge is only expected and carries market, sequence, and tax risk.
Is a lump sum or a recurring extra payment better?+
Earlier is always better because interest compounds on the remaining balance, so a lump sum applied today saves more than the same amount spread over years. In practice a recurring extra payment is what most people can sustain, and consistency matters more than timing — set it, automate it, and confirm on your statement that the servicer applies it to principal rather than prepaying next month's bill.
Key Considerations
- Overpay vs. invest is a rate comparison. Paying extra earns a guaranteed return equal to your mortgage rate. A low rate (say 3%) usually favours investing; a high rate (7%+) favours paying down the loan.
- Mind your liquidity. Money sunk into home equity is hard to get back without a sale or refinance. Keep a solid emergency fund before accelerating payoff.
- Taxes can shift the math. If you itemize and deduct mortgage interest, your effective rate is a bit lower than the headline APR — which tilts slightly toward investing.
- Check for prepayment penalties. Most modern mortgages have none, but confirm with your lender before sending large extra payments.
Related Tools
Decision guide
Compare guaranteed interest savings with investment uncertainty
An extra principal payment earns a predictable benefit equal to interest no longer owed. Investing may return more, but it is uncertain, may be taxable, and has different liquidity.
Use money available after emergency savings and higher-rate debt.
Consider taxes, fees, liquidity, and risk—not only APR versus an optimistic return.
What this model includes
- Amortization, payoff date, and interest saved
- A side-by-side investment projection where provided
What to add outside the model
- Escrow, property tax, insurance, and refinancing costs
- Tax deduction eligibility and variable loan terms
Calculation standard: Formula details, source policy, tests, and limitations are documented in the FinancialDepth methodology. Reviewed September 19, 2026.