Housing · Worked example
What a $5,000 mortgage lump sum changes a year into repayment
In this hypothetical $300,000 fixed-rate mortgage at 6.5% for 30 years, the first payment is September 2026. Applying $5,000 of extra principal in September 2027 moves the modeled payoff to April 2055: 16 monthly payments earlier, with $26,242.38 less lifetime interest. The regular principal-and-interest payment remains $1,896.20; this model shortens repayment rather than recasting the required payment.
Put the extra payment on the calendar
The first payment is September 2026 and the lump sum is applied with payment 13, in September 2027. Monthly interest is charged first, then the scheduled principal payment and the extra $5,000 reduce the balance. There are no other recurring or one-time extras in this scenario.
The no-extra schedule contains 360 payments. The extra-principal schedule contains 344, including a smaller capped final payment. The $5,000 is not a fee or an additional interest charge: it replaces principal that otherwise would have been repaid later.
Why the timing matters
A principal reduction changes the balance used to calculate later interest. Test the same $5,000 at an earlier or later date to isolate timing rather than changing both the date and the amount. The calculator also permits two separate lump sums, a recurring annual payment and monthly extras that begin at a selected payment number.
The interest saving assumes the loan is kept until its modeled payoff. Selling or refinancing earlier changes the interest that can actually be avoided. This illustration does not compare investing the cash, preserving liquidity or repaying a different debt.
Check the schedule rather than just the headline
Switch to Monthly to find September 2027 and confirm the extra principal. Yearly groups use calendar years, so the first year has only four payments. Download the CSV to reconcile principal and interest; displayed rows round to cents while the engine keeps unrounded intermediate balances.
Confirm the loan's prepayment terms and how the servicer designates extra principal. A real lender may use different processing dates, daily interest or cent-level accounting. An amortization model does not establish the instructions for submitting an actual payment.
$5,000 at payment 13
Hypothetical inputs: Loan amount: 300000; Note interest rate (%): 6.5; Loan term (years): 30; Balance checkpoint (years): 10; Extra monthly principal: 0; First payment year: 2026; First payment month: September; Schedule view: Yearly; Start monthly extras at payment number: 1; Extra annual principal: 0; Annual extra-payment month: December; One-time principal payment 1: 5000; One-time payment 1 year: 2027; One-time payment 1 month: September; One-time principal payment 2: 0; One-time payment 2 year: 2026; One-time payment 2 month: September.
- Scheduled principal and interest: $1,896.20
- Estimated total interest: $356,391.08
- Payoff month: 2055-04
- Interest saved versus no extras: $26,242.38
- Months saved: 16
Limitations and what to check
Hypothetical fixed note rate, on-time monthly payments and no escrow, fees, penalties, tax effects or recast. Calendar dates label payment months, not daily accrual. Confirm actual loan terms before acting. The result is an estimate, not personal financial advice.
Sources
- CFPB: How does paying down a mortgage work? — Explains principal, interest and amortization. The dates, amounts and numerical results in this article are Fair Calcs' explicitly hypothetical model, not a CFPB example.