Should You Make Extra Mortgage Payments?

Should You Make Extra Mortgage Payments? Here’s What to Know

By Jen Widler

If you’re like many homeowners, you’ve probably wondered whether tossing a little extra at your mortgage is a smart move. In a lot of cases, the answer is yes—but there are a few things to understand before you start chipping away at your balance.

Why Extra Payments Can Pay Off

Your mortgage payment each month covers both your loan balance (the principal) and the interest the lender charges. Early on, most of your payment is going toward interest—not the loan itself.

When you make an extra payment and apply it directly to the principal, you lower your loan balance faster. This reduces the total interest you'll pay over time—and could even help you pay off the loan years ahead of schedule.

A Simple Strategy: One Extra Payment Per Year

One common (and easy) tactic? Make one extra mortgage payment per year. That could mean putting a chunk of your tax refund or bonus toward the loan—or just dividing one payment into 12 parts and adding a little to each monthly payment.

Over the life of a 30-year mortgage, that one extra payment a year can add up to big savings and shave several years off your loan.

Biweekly Payments: How They Work

Another option is switching to biweekly payments—making half of your monthly payment every two weeks. Since there are 52 weeks in a year, this adds up to 26 half-payments, or 13 full payments per year instead of 12.

That extra payment can quietly work in the background to shorten your loan and reduce your interest paid. Just be sure to check with your lender first—some offer biweekly payment programs, and others may require you to set it up yourself.

A Few Things to Double-Check

Before you start sending in extra money, take a quick look at the fine print of your loan:

• Any prepayment penalties? Most loans today don’t have them, but it’s worth confirming.
• Make sure it’s applied to the principal. If not specified, your extra money could go toward future interest or payments instead, which won’t help reduce the loan balance.

Also, zoom out and look at your overall financial picture. If you’re carrying high-interest debt, building up emergency savings, or trying to max out retirement contributions, those might take priority.

Final Takeaway

Paying extra on your mortgage can be a great way to save money and build equity faster—but it should fit into your bigger financial plan. The key is making sure it aligns with your goals and makes sense for your current situation.

Here's a clear, simple example to show how making just one extra mortgage payment per year can significantly reduce both the life of the loan and the total interest paid on a 30-year mortgage:

📊 Example: One Extra Payment Per Year

Let’s say you have the following mortgage:

• Loan amount: $400,000
• Interest rate: 6.5%
• Term: 30 years (360 months)
• Monthly payment (principal & interest only): ≈ $2,528

Now let’s see what happens when you make one extra payment of $2,528 per year, applied directly to principal:

🔍 Scenario A: No Extra Payments

• Total interest paid over 30 years: $511,682
• Total cost of loan: $911,682
• Loan term: 30 years

✅ Scenario B: One Extra Payment Per Year

• Total interest paid: $444,212
• Total cost of loan: $844,212
• Loan paid off in: ~25 years and 6 months

🎉 The Impact

By making just one extra payment per year:

• You pay off the loan about 4.5 years early
• You save over $67,000 in interest

💡 Why It Works

Extra payments go straight to the principal, which means:

• Your balance drops faster
• Less interest accumulates over time
• You build equity more quickly

This is a simple strategy that doesn’t require a big financial stretch—but can have a major long-term payoff.

Thinking about this strategy or want to chat through your options? I’m always happy to help break it down. Please reach out today!