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How Much Does One Extra Mortgage Payment a Year Save?

Published October 14, 2026 · By the PrepayMath team

Not financial advice. This guide is for general education only. Examples use simplified assumptions (fixed rates, principal and interest only) and are not recommendations or rate quotes. Confirm details with your loan servicer, lender, or a licensed financial or tax professional before acting.

"Make one extra payment a year and you'll pay off your 30-year mortgage years early." You've probably heard some version of that advice. It's mostly true, but the details depend on your loan size, rate and how you make the extra payment. This guide shows exactly how much one extra payment a year saves, with numbers you can check yourself.

Why one extra payment makes a difference

Early in a mortgage, most of each payment goes to interest. Interest is charged on the outstanding balance, so any extra dollar that goes to principal reduces the balance that every future month's interest is calculated on. That saving compounds: next month a little more of your regular payment goes to principal, and the month after that a little more again. Over decades it adds up to years cut from the loan.

Worked example: $300,000 at 6.5%

Take a new $300,000, 30-year loan at 6.5%. The principal-and-interest payment is $1,896.20, and over 30 years you'd pay about $382,633 in interest.

There are two common ways to add "one extra payment a year":

Method 1: Add 1/12 of a payment every month

Divide your payment by 12 and add it to each monthly payment, here $158.02 extra per month. That's the same $1,896.20 a year, spread out. Result:

• Paid off in about 24 years 2 months, 5 years 10 months early
• Interest saved: about $87,256

Method 2: Make one full extra payment once a year

If you instead send one extra $1,896.20 payment at the end of each year, the result is very close: paid off in about 24 years 4 months, with about $83,985 in interest saved. The monthly approach saves slightly more because each extra dollar starts reducing interest sooner.

Either way, the lesson is the same. On this loan, one extra payment a year is worth roughly six years and $84,000 to $87,000 of interest.

How the savings change with loan size and rate

We ran the same 1/12-per-month approach on two other 30-year loans:

Two patterns stand out:

• Higher rates mean bigger savings. At 7%, one extra payment a year cuts more than six years. At 5%, it's under five years. Each dollar of principal you remove early avoids more interest when the rate is higher.
• Dollar savings scale with the loan. The time saved depends mostly on the rate, but the dollars saved grow with the balance.

For context, Freddie Mac's weekly survey put the average 30-year fixed rate at 7.40% for the week of October 8, 2026 (Freddie Mac Primary Mortgage Market Survey). If you took out a loan recently, your savings from extra payments are likely toward the high end of this table.

What about biweekly payment plans?

A true biweekly plan has you pay half your monthly payment every two weeks. There are 52 weeks in a year, so you make 26 half-payments, which equals 13 full payments. That's one extra payment a year, delivered in small pieces, and the results are close to Method 1 above.

A few cautions:

• Some third-party biweekly services charge setup or per-payment fees. Those fees eat into the savings, and you can usually get the same result for free by adding 1/12 to each monthly payment yourself.
• Some servicers hold partial payments until a full payment arrives, so the extra money may not reach principal right away. Ask how your servicer handles them.

How to make sure extra money goes to principal

• Use your servicer's "additional principal" field online, or write "apply to principal" on a check.
• Check your next statement to confirm the principal balance dropped by the extra amount. For loans owned by Fannie Mae, servicer rules say a principal curtailment sent with the monthly payment is applied after that payment, and one sent separately at another time of the month is applied before the next scheduled payment. ^[source]
• Ask whether your loan has a prepayment penalty. According to the CFPB: What is a prepayment penalty?, penalties typically apply when you pay off the whole loan within a set number of years, and don't normally apply to paying extra principal in small amounts. It's still worth confirming with your lender.

Is one extra payment a year the right move for you?

Extra payments are a guaranteed return equal to your mortgage rate. Every dollar saves interest at that rate, with no market risk. But that money is locked in your house. Before you prepay, many households first:

• Build an emergency fund. ^[source]
• Pay off higher-interest debt like credit cards.
• Capture any employer retirement match, which is often an immediate return that's hard to beat.

If you're torn between prepaying and investing, our guide Should you pay off your mortgage early or invest? walks through that decision. And if you have a lump sum rather than monthly extra cash, see Is recasting a mortgage worth it?

Ways to find the extra payment without straining your budget

• Round up. If your payment is $1,896.20, paying $2,000 adds about $104 a month, roughly two-thirds of the "1/12" target with little effort.
• Use windfalls. A tax refund, bonus or gift sent once a year as a principal payment works like Method 2 above.
• Redirect a finished expense. When a car loan or childcare cost ends, send some of that money to principal.
• Automate it. Set up a recurring extra principal payment so it happens without a monthly decision.

Common mistakes to avoid

• Paying a fee for a biweekly service that you could replicate for free by adding 1/12 to each payment.
• Not labeling the extra money. If it isn't marked as principal, a servicer may treat it as an early next payment.
• Prepaying while carrying high-interest debt. Credit card interest is usually far higher than any mortgage rate.
• Expecting a lower monthly payment. Extra payments shorten the loan. They don't reduce the required payment unless you recast.

What about starting later in the loan?

The examples above assume you start extra payments at the beginning of a 30-year loan, when the savings are largest. If you're already 10 years in, extra payments still save interest and shorten the loan, just less dramatically, because more of each regular payment is already going to principal. Enter your current balance and years remaining in the extra payment calculator to see your exact numbers.

The bottom line

One extra payment a year (or 1/12 of a payment added each month) typically cuts a 30-year mortgage by roughly 4½ to 6½ years in our examples and saves tens of thousands to well over $100,000 in interest, depending on your rate and balance. It's simple, free to do yourself, and you can stop any time.

Calculate your early payoff date with the Extra Payment Calculator →

Not financial advice. This guide is for general education only. Examples use simplified assumptions (fixed rates, principal and interest only) and are not recommendations or rate quotes. Confirm details with your loan servicer, lender, or a licensed financial or tax professional before acting.