One extra payment cuts years off your mortgage, but the exact savings depend on your loan size, interest rate, and where you are in the payoff

A single extra mortgage payment reduces the total interest you pay and shortens your loan by roughly one month to several months, depending on your situation. The earlier in the loan you make it, the more interest it saves. On a $300,000 loan at 6% interest, one extra payment made in year one might save $15,000 to $25,000 in total interest and cut 12 to 18 months off the loan. The same payment made in year 20 saves far less — perhaps $2,000 to $5,000 — because most of the interest has already been paid.

The reason the timing matters so much is how mortgages work: early payments go almost entirely toward interest, while later payments go mostly toward principal. When you make an extra payment early, you're reducing the balance that future interest gets calculated on. When you make it late, the loan is already mostly paid down, so the interest savings shrink.

Key Takeaways

  • One extra payment made in the first five years typically saves $10,000 to $30,000 in interest, depending on loan size and rate.
  • The same payment made after year 15 saves much less — usually $2,000 to $8,000 — because most interest has already been paid.
  • An extra payment always shortens the loan, but the time saved ranges from one month to over a year depending on when you make it.
  • You can calculate your specific savings using an amortization calculator by comparing your payoff date and total interest with and without the extra payment.

How the savings work: principal versus interest

Your mortgage payment is split between principal (the amount you borrowed) and interest (what the lender charges). Early in the loan, most of your payment goes to interest. On a 30-year mortgage, your first payment might be 80% interest and 20% principal. By year 25, it flips — 20% interest and 80% principal.

When you make an extra payment, you're paying down principal. That lower principal balance means the lender calculates interest on a smaller amount for every month that follows. The earlier you reduce the principal, the more months benefit from that lower balance, so the interest savings multiply.

Example: On a $300,000 loan at 6% over 30 years, your monthly payment is about $1,800. One extra $1,800 payment in month 12 reduces the remaining balance by $1,800. That $1,800 will not earn interest for the remaining 348 months of the loan. At 6% annual interest, that's roughly $1,800 × 0.06 × 29 years = significant savings. The same $1,800 payment in month 300 (year 25) only saves interest for 60 remaining months, so the total is much smaller.

Real savings across different loan scenarios

The actual dollar amount depends on three things: how much you borrowed, what interest rate you locked in, and when in the loan you make the payment. Here's how the range typically breaks down:

Loan amount $200,000 at 5% interest (30-year term): One extra payment in year 1 saves roughly $8,000 to $12,000 in interest and cuts 10 to 14 months off the loan. The same payment in year 20 saves $1,500 to $3,000.

Loan amount $300,000 at 6% interest (30-year term): One extra payment in year 1 saves roughly $15,000 to $22,000 in interest and cuts 12 to 18 months off the loan. The same payment in year 20 saves $2,500 to $5,000.

Loan amount $400,000 at 7% interest (30-year term): One extra payment in year 1 saves roughly $25,000 to $35,000 in interest and cuts 14 to 20 months off the loan. The same payment in year 20 saves $4,000 to $8,000.

These ranges vary because every loan is slightly different. The best way to see your exact number is to use an amortization calculator — enter your loan details, calculate the payoff date and total interest, then change the extra payment to a different month and recalculate.

Why one payment is not the same as paying biweekly

Some people ask whether making one extra payment per year is the same as switching to biweekly payments. The answer is no — biweekly payments save more.

With biweekly payments, you make 26 half-payments per year instead of 12 full payments. That adds up to 13 full payments per year instead of 12. Over 30 years, that's 30 extra payments total, not just one. The interest savings from biweekly payments are roughly 5 to 7 years of payoff time and $40,000 to $80,000 in interest on a $300,000 loan, depending on the rate.

One extra payment per year gives you one-thirteenth of those savings. It's still worthwhile, but it's a different strategy with a different outcome.

When to make the extra payment for maximum impact

If you can only afford one extra payment, timing matters. The first five years of your loan are when interest dominates your payment. Making an extra payment during this window — especially in years 1 through 3 — saves the most interest because you're reducing the principal while the loan still has 25 to 28 years to run.

If you're already in year 15 or later, one extra payment still helps, but the savings shrink significantly. At that point, most of your regular payments are already going to principal, so the extra payment's impact is smaller. This doesn't mean you shouldn't do it — it just means the return is lower.

If you have a choice between making one extra payment now or waiting until later, make it now. The sooner you reduce the principal, the more interest you avoid.

What happens to your monthly payment after an extra payment

Making one extra payment does not change your regular monthly payment amount. You still owe the same $1,800 (or whatever your payment is) every month. The extra payment straightforward shortens how long you'll be making those payments.

Some people worry that an extra payment will trigger a loan modification or change their terms. It won't. Your lender will accept the extra money, explore it to principal, and adjust your payoff date accordingly. You keep the same interest rate, the same monthly payment, and the same loan terms — you just finish earlier.

If you want to lower your monthly payment instead of shortening the loan, you would need to refinance, which is a different process entirely.

How to calculate your specific savings

To find out exactly how much one extra payment saves you, you need three pieces of information: your current loan balance, your interest rate, and your remaining loan term. Then use an amortization calculator (available free online from most banks and financial websites).

Enter your loan details and note the payoff date and total remaining interest. Then change the extra payment to a specific month and recalculate. The difference between the two totals is your savings. Repeat for different months if you want to see how timing affects the outcome.

Most mortgage servicers also provide an amortization schedule with your loan documents or online account. You can use that to estimate the impact without a calculator, though a calculator is faster and more accurate.

Frequently Asked Questions

Does my lender have to accept an extra payment?

Yes. Federal law requires lenders to accept extra principal payments without penalty. Some lenders ask you to specify that the extra money goes to principal rather than being held as a credit, so check your loan documents or call to confirm the process. Most lenders now accept extra payments online or by mail.

What if I make extra payments every year instead of just one?

Each extra payment compounds the savings. Two extra payments per year save roughly twice as much interest and cut the loan by roughly twice as many months. Twelve extra payments per year (one per month) is equivalent to making 13 payments annually, which saves 5 to 7 years and $40,000 to $80,000 on a typical $300,000 loan.

Is making an extra payment better than investing the money?

That depends on what return you could earn by investing instead. If you can earn more than your mortgage interest rate in the stock market or another investment, investing might be better. If not, paying down the mortgage is the safer choice. This is a personal finance decision, not a banking one.

Can I make an extra payment if I'm behind on my mortgage?

No. If you're behind, contact your lender when ready to discuss a payment plan or loan modification. Making extra payments won't help if you're in default, and it could delay the help you actually need.

Does an extra payment affect my credit score?

No. Paying down your mortgage early does not hurt your credit. It may slightly reduce your credit mix (the variety of credit types you use), but the impact is minimal and temporary.