How Extra Payments Reduce Your Mortgage

Each normal payment is split into interest and principal. Interest is based on the current balance, so as the balance falls, the interest part shrinks and more goes to principal. When you pay extra toward principal, you lower the balance sooner. That cuts future interest and shortens the term. Even a small extra amount each month can save a lot over the life of the loan.

Ways to Pay Off Sooner

• Extra monthly: Add a fixed amount to each payment. Easy to automate and has a big impact over time.
• Extra yearly: A lump sum once a year (e.g. a bonus or tax refund) applied to principal.
• One-time: A single lump sum now. Useful for windfalls or when you want to jump-start payoff.
• Biweekly: Pay half your monthly amount every two weeks. Over a year that’s 26 half-payments, or 13 full payments instead of 12, so you effectively add one extra payment per year toward principal.

Before You Pay Extra

• Prepayment penalties: Some loans charge a fee for paying off early. Check your note or ask your lender.
• Opportunity cost: Mortgages often have low rates. If you have higher-interest debt (e.g. credit cards) or no emergency fund, tackling those first may help more.
• Retirement: If you’re not maxing tax-advantaged retirement accounts, the long-term return may outweigh mortgage interest saved. It depends on your rate, tax situation, and risk tolerance.

Frequently Asked Questions

How do extra payments shorten my mortgage?

Extra amounts go to principal, which lowers the balance faster. A lower balance means less interest each month and more of your regular payment going to principal, so the loan pays off sooner and you pay less total interest.

What is biweekly mortgage payment?

You pay half your normal monthly payment every two weeks. With 26 half-payments per year, that’s 13 full monthly payments. The extra payment each year goes to principal and can shorten the term and reduce total interest.

Should I pay off my mortgage early?

It depends on your situation. Paying off early saves interest and can simplify your budget. But check for prepayment penalties and whether that money could do more elsewhere—for example, paying high-interest debt, building an emergency fund, or saving for retirement.

Can I use this if I don’t know my remaining term?

Yes. Choose “Balance + payment” and enter your current balance, monthly payment, and interest rate. The calculator finds the remaining term and then shows how extra or biweekly payments change payoff time and interest.