Quick answer: On an 800,000 loan at 5% over 25 years (payment 4,676.72), paying 1,000 extra a month clears it in 17 years 9 months instead of 25 years and saves 195,073.87 in interest.
How it's calculated
The regular payment comes from the amortization formula M = P·r ÷ (1 − (1 + r)^−n). Each month interest is charged on the remaining balance (balance × rate ÷ 12) and the rest of the payment reduces the balance.
An extra payment goes straight to the balance, so every later month carries less interest. The calculator runs the schedule twice, with and without the extra, and compares the total interest and the number of months.
Islamic home finance (Murabaha, Ijara) uses a profit rate; for a fixed rate the schedule works the same way, but early settlement terms differ by bank. For the plain schedule use the mortgage calculator.
Worked examples
- 800,000 at 5%, 25 years, +1,000 a month: 300 → 213 months, saves 195,073.87
- Same loan, +500 a month: 300 → 249 months, saves 117,468.27
Frequently asked questions
Is it better to pay extra monthly or a lump sum?
Money paid earlier saves more interest. A lump sum today beats the same amount spread over the year; see the mortgage payoff calculator for a one-time payment.
Does my bank charge for paying early?
Many do. In the UAE the Central Bank caps the mortgage early settlement fee at 1% of the outstanding balance or AED 10,000, whichever is less. Saudi banks follow SAMA's early repayment rules. Check your contract.
Does the extra payment lower my monthly payment?
No. Here the payment stays the same and the loan ends sooner. Some banks can instead recalculate a lower payment over the original term.
Why does extra paid early save so much?
It cuts the balance on which every later month's interest is charged, so its effect lasts for the rest of the loan.
Can I see how much I owe after a few years?
Yes. The schedule shows the remaining balance, so you can read it for any point in the term.
Why do I owe so much after years of payments?
Early payments are mostly interest, so the balance falls slowly at first and faster towards the end.