Last updated: March 2026
How Extra Payments Save You Thousands on Your Mortgage
Extra mortgage payments are one of the most powerful wealth-building strategies available to homeowners. Every extra dollar goes directly to principal, reducing the balance that future interest is calculated on. The earlier you start, the more dramatic the savings.
The biweekly payment strategy is the easiest to implement. By paying half your monthly amount every two weeks, you make 26 half-payments (= 13 full payments) per year instead of 12. That one extra payment per year, on a $280,000 loan at 6.75%, saves approximately $58,000 in interest and pays off the mortgage 4-5 years early.
The round-up strategy is nearly as effective with zero lifestyle impact. If your payment is $1,817, round to $1,900. That extra $83/month saves over $35,000 in interest. Round to $2,000 and save $60,000+. These small amounts compound dramatically because they reduce principal early when interest charges are highest.
Lump sum payments from tax refunds, bonuses, or windfalls are especially powerful when applied early in the loan. A $5,000 lump sum in year 1 saves roughly $15,000-$20,000 in lifetime interest on a typical 30-year mortgage. The same $5,000 in year 25 saves only $500-$1,000.
Before accelerating your mortgage, ensure you have an emergency fund (3-6 months expenses), are contributing to retirement accounts, and have no higher-interest debt (credit cards, personal loans). Your mortgage is likely your lowest-rate debt, so pay off expensive debt first.
Frequently Asked Questions
How much do extra mortgage payments save?
On a $280,000 loan at 6.75% for 30 years: $100/month extra saves ~$50,000 in interest and pays off 4.5 years early. $200/month saves ~$85,000 and pays off 7.5 years early. $500/month saves ~$147,000 and pays off 14.5 years early.
How do biweekly payments work?
Instead of 12 monthly payments, you make 26 biweekly payments (half the monthly amount every two weeks). This equals 13 monthly payments per year — one extra payment annually. This simple change saves tens of thousands in interest and pays off a 30-year mortgage about 4-5 years early.
When is the best time to make extra payments?
The earlier the better. Extra payments in the first 5-10 years have the most impact because they reduce the balance while interest charges are highest. A $10,000 lump sum in year 1 saves far more than the same amount in year 25.
Should I pay off my mortgage or invest?
If your mortgage rate is below what you'd earn investing (historically ~7-10% in the stock market), investing may grow more wealth. But paying off the mortgage provides guaranteed 'returns' equal to your interest rate and emotional peace. Many people do both — making some extra payments while also investing.
Are there prepayment penalties?
Most conventional, FHA, and VA mortgages have no prepayment penalty. Some older loans or certain loan types may have penalties for paying off too quickly. Check your loan documents or call your servicer to confirm before making large extra payments.
What's the round-up strategy?
Round your payment up to the next hundred. If your P&I is $1,817, pay $1,900. That extra $83/month goes to principal and can save over $35,000 in interest on a typical 30-year mortgage. It's an easy, painless way to pay off your mortgage faster.
Should I make a lump sum payment or spread it monthly?
Mathematically, a lump sum payment sooner saves more interest because it reduces the balance immediately. If you receive a bonus or tax refund, applying it to principal immediately is more effective than dividing it into monthly installments over the year.