Our mortgage loans are credit first to interest balance to principal. If a customer wants to pay multiple payments to get ahead, can we calculate the interest ahead as well and let it sit negative? The problem is when a customer pays ahead, the interest is paid as of that date and the majority of the payments are going to principle at that time. But fast forward when they pay again 2 or 3 months later, the interest has accrued all that time and becomes more than the payment amount and now the payments are going to interest only for several months. I'm curious to see how other banks are handling advance payments.

Are these simple interest loans? You cannot pay a simple interest loan ahead. You need to be thoroughly reading your notes. Most likely it will state that additional payments do not impact the required payment schedule.

Unless this is a scheduled payment loan?? In which case, you would not be applying the payments in the manner you have described.