Extra Amortization Comparator

Discover the best strategy to pay off your mortgage financing. Compare in real-time the impact of amortizing an extra amount every month versus making a single annual payment (such as the 13th salary or severance fund balance).

Quick Profiles:

Balanced Contribution Aggressive Contribution Moderate Contribution

1. Financing Data

Current Outstanding Balance

The amount you still owe to the bank.

Remaining Term

months

Number of installments left to pay.

Nominal Interest Rate

% p.a.

The interest rate contracted per year.

Amortization System

2. Extra Contribution Strategies

Strategy A: Monthly Contribution

The extra amount paid along with the monthly payment.

Strategy B: Annual Contribution

A one-time payment or lump sum made every 12 months (e.g., severance fund or 13th salary).

Payoff Term (Monthly Extra)

0 months

Payoff Term (Annual Extra)

0 months

Interest Saved (Monthly)

$ 0.00

Interest Saved (Annual)

$ 0.00

Time Saved (Monthly)

0 months

Time Saved (Annual)

0 months

Comparative of Total Interest Paid

Outstanding Balance Reduction Curve

Detailed Comparison of Strategies

Parameter	Without Extra Amortization	Strategy A: Monthly Contributions	Strategy B: Annual Contributions

Extra Amortization: How it works and why it reduces costs

Amortizing a debt means paying directly the principal amount borrowed, and not the interest. In Brazilian mortgage contracts, when you make a regular payment, most of the installment amount goes towards covering interest for the month and insurance; only a small portion actually reduces your debt.

However, by making an Extra Amortization, 100% of that additional amount goes directly towards reducing the outstanding principal balance. Since the interest for the next month is calculated as a percentage of the remaining outstanding balance, reducing the outstanding balance makes future interest substantially smaller. It's the reverse effect of compound interest working in your favor.

Monthly Strategy vs. Annual Strategy

Monthly Recurring (Scenario A): Amortizing small amounts monthly is very efficient mathematically. By reducing the outstanding balance at the beginning of each month, you immediately reduce the interest base for the next payment. The accumulated effect of $500.00 per month is extremely powerful.
Annual One-Time (Scenario B): Using larger annual payments (such as $6,000.00 at the end of the year) is also excellent and very practical for those using the 13th salary or biennial withdrawals from the severance fund (FGTS). However, in an exact comparison, monthly amortization saves a bit more in interest because the reductions start earlier, avoiding the accumulation of interest throughout the year.

Important Tip: Reducing Term vs. Reducing Installment

In Brazil, when you make an extra amortization, you can choose between reducing the term (paying off the contract faster while keeping the installment amount) or reducing the installment amount (continuing with the same term). Reducing the term is much more efficient mathematically, as it eliminates months of interest and mandatory additional insurance payments.

Frequently Asked Questions

No. According to the Consumer Defense Code and the resolutions of the Central Bank, you have the guaranteed right by law to make early repayment (partial or total) of your debt with proportional reduction of interest, and banks are prohibited from charging fees for this service.

To use the severance fund (FGTS) for amortizing the outstanding balance or total payoff, the legislation requires a minimum interval of 2 years (24 months) between each operation on the same contract. However, to reduce up to 80% of the monthly payment amount, there is no such interval, and it can be requested annually.

Both the SAC and PRICE tables are very advantageous for extra amortizations. However, in the SAC table, since the initial installments are larger and amortize the debt faster from the beginning, the extra contributions accelerate the reduction of the outstanding balance even more, resulting in a much cheaper payoff than in the PRICE table.