One extra mortgage payment a year can take about 4.5 to 6 years off a brand-new 30-year loan and save tens of thousands of dollars in interest, or more. Start later in the loan and the savings shrink, to about 2 to 3 years if you begin around year ten. The higher your rate, the more each extra payment is worth.
I have closed loans around Puget Sound for more than 25 years, and I do not sell, I educate. This is one of the simplest strategies I teach Seattle, King County and Snohomish County homeowners, and it is the one I use on my own mortgage. Below is the math, why your result depends on when you start, and how to set it up so every extra dollar actually lands on principal. If you are still shopping, my guide to financing a home in Seattle covers the bigger picture.
How Does One Extra Mortgage Payment a Year Shorten Your Loan?
Every monthly payment on a fixed-rate loan is split two ways: interest owed for that month, and principal, the part that pays down what you borrowed. Early in a 30-year loan, most of the payment goes to interest. That schedule is called amortization, and it is why balances move so slowly in the first decade.
An extra mortgage payment skips the interest line entirely. When your servicer applies it to principal, the balance drops right away. Next month’s interest is figured on that smaller balance, so a little more of your regular payment goes to principal. That shift repeats every month for the rest of the loan. The extra payment keeps working long after you make it, which is why one payment a year can erase years, not months.
Your required monthly payment does not change. You simply reach a zero balance sooner.
Extra Mortgage Payment Math: Years and Interest Saved by Start Year
Here is what one extra payment a year does on a $500,000, 30-year fixed loan, a balance that is common for Seattle and Eastside buyers. I ran it at two rate levels, one lower and one higher, to show how much the rate matters. The rows show what happens when you start in year one versus later in the loan.
| Start Extra Payments In | Lower-Rate Loan | Higher-Rate Loan |
|---|---|---|
| Year 1 | About 4.6 years sooner, about $82,000 less interest | About 6 years sooner, about $164,000 less interest |
| Year 6 | About 3.3 years sooner, about $53,000 less interest | About 4.3 years sooner, about $104,000 less interest |
| Year 11 | About 2.3 years sooner, about $31,000 less interest | About 2.9 years sooner, about $60,000 less interest |
| Year 16 | About 1.5 years sooner, about $16,000 less interest | About 1.8 years sooner, about $30,000 less interest |
Illustrative example only, assuming one full extra principal payment at the end of each year from the start year onward. Your results vary by loan profile, including balance, rate, term and payment history. This is not a quote of terms or a commitment to lend.
Two things jump out. First, the earlier you start, the bigger the payoff, because each extra dollar has more years to save interest. Second, a higher-rate loan gets roughly double the interest savings, because every dollar of principal you retire was costing you more.
Loan size changes the dollar amounts, not the years. A $300,000 loan and a $900,000 loan with the same rate and start year save about the same number of years, because the extra payment is always one payment’s worth of that loan.
Why My Extra Mortgage Payment Video Shows 2 Years, Not 6
In the video above, I run the numbers on my own mortgage, and the spreadsheet shows the payoff moving from 360 months to 336 months. That is about 2 years, not 6. Both numbers are right. My loan was already well into its schedule when I ran it, and the table shows how much a later start reduces the years saved.
That is the real lesson. The headline number you see online, often “6 years,” assumes you start on day one of a new loan at a higher rate. Your number depends on where you are today. A spreadsheet or amortization calculator with your actual balance, rate and remaining term will tell you the truth for your loan, and I am glad to run it with you.
Want to run it yourself first? Download my free extra payment amortization tool (Excel). The video above walks through how to use it: enter the balance, rate and remaining term from your own mortgage statement, then test different extra payment amounts. The results are estimates for illustration only, not a loan offer.
How to Make an Extra Mortgage Payment the Right Way
The strategy only works if the money reaches principal. Here is the checklist I give clients.
- Mark it “principal only.” Most servicers have a separate field or checkbox for extra principal online. If you just send more money, some servicers treat it as an early copy of next month’s payment, which does nothing for your balance.
- Check the next statement. Confirm the extra amount shows under principal and the balance dropped by that amount.
- Confirm there is no prepayment penalty. Most residential loans today have none, but your note says for sure. The CFPB explains prepayment penalties and where to find them in your loan documents.
- Keep your safety net first. Money paid into your house is hard to get back out without selling or borrowing. Build an emergency fund before you accelerate payoff.
Three Ways to Fund It
Save a twelfth each month. Divide your monthly principal and interest payment by 12 and move that amount to savings automatically. On an illustrative $2,700 payment, that is $225 a month. Once a year, send the full amount as a principal payment. December works well for many people, though any month is fine if you keep it consistent.
Add a twelfth to every payment. Same math, paid monthly. It starts saving interest a little sooner because principal drops every month instead of once a year.
Use biweekly payments. Paying half your payment every two weeks adds up to 26 half payments, or 13 full payments a year. Only use a biweekly plan your servicer offers for free, and confirm it applies each half payment when received rather than holding it.
Want to see what one extra mortgage payment a year does on your actual loan? Send me your balance and remaining term and I will build a side-by-side payoff schedule for you. No pressure and no obligation. Call me at (206) 601-3426 or send a quick email.
Extra Mortgage Payments for Seattle and Puget Sound Homeowners
Puget Sound balances run large. The 2026 conforming loan limit in King County and Snohomish County is $1,063,750 for a single-family home, and plenty of Seattle, Bellevue and Kirkland loans sit near it. A bigger balance does not change the years saved, but it makes every one of those years worth far more in interest.
Many of my clients at Amazon, Microsoft, Google and other Seattle-area tech employers have a built-in funding source: RSU vesting. A slice of a quarterly or annual vest can serve as the extra principal payment with no change to the monthly budget. Talk with your tax professional about the tax side of selling vested shares first. This is not tax advice.
If you have a larger lump sum, from an inheritance, a bonus or the sale of another property, compare a one-time principal payment with a recast. A recast re-amortizes your loan after a large principal payment so your required monthly payment drops, while an extra mortgage payment keeps the payment the same and shortens the term. Most conventional servicers allow a recast for a modest fee once you pay down a minimum amount; FHA and VA loans generally cannot be recast. If you are weighing a lump sum against a new loan altogether, my guide to refinancing in Seattle covers when that makes sense.
Should You Make an Extra Mortgage Payment or Invest the Money?
An extra mortgage payment gives you a guaranteed return equal to your loan’s rate, with no market risk. Investing may earn more over long periods, but the outcome is not guaranteed. Neither answer is right for everyone.
Here is how I frame it with clients. If your rate is on the lower side, investing or building retirement savings often comes first. If your rate is on the higher side, paying down principal becomes more attractive, and the table above shows why. Either way, capture any employer 401(k) match and keep an emergency fund before you send extra to the house. My guide to paying off your mortgage early in Seattle walks through that trade-off in more depth.
Extra Mortgage Payments and PMI: A Bonus for Low Down Payment Buyers
If you put less than 20% down on a conventional loan, you likely pay private mortgage insurance, or PMI. PMI protects the lender, not you. Extra principal payments move you toward 80% loan-to-value sooner, which is the point where you can typically ask your servicer to remove it. PMI generally drops off automatically at 78% based on the original schedule. The CFPB lays out the PMI removal rules.
For many first-time buyers, dropping PMI early is the most immediate payoff of an extra mortgage payment, because it lowers the monthly bill right away. FHA mortgage insurance follows different rules, so check your loan type first.
Frequently Asked Questions About an Extra Mortgage Payment
How many years does one extra mortgage payment a year save?
On a brand-new 30-year fixed loan, one extra payment a year typically cuts about 4.5 to 6 years off the payoff, depending on the rate. Starting later saves fewer years: about 3 to 4 if you start around year six, and about 2 to 3 around year eleven. Loan size changes the dollars saved, not the years. These are illustrative figures, and your own balance, rate and remaining term determine your result.
How much interest can an extra mortgage payment save on a $500,000 loan?
In an illustrative example on a new $500,000, 30-year loan, one extra payment a year saved about $82,000 in interest at a lower rate and about $164,000 at a higher rate. Starting ten years in, the savings fell to about $31,000 to $60,000. The higher your rate and the earlier you start, the more you save. Run your own numbers before deciding.
Does an extra mortgage payment lower my monthly payment?
No. On a fixed-rate loan, your required monthly payment stays the same and the loan simply pays off sooner. If you want a lower monthly payment after a large principal payment, ask your servicer about a recast, which re-amortizes the remaining balance over the remaining term. Recasts usually require a minimum lump sum and a small fee, and not every loan type allows them.
Is it better to make one extra payment a year or add a little each month?
Adding one twelfth of your payment each month saves slightly more, because principal drops every month instead of once a year. The difference is small, so choose the method you will actually keep doing. Some people prefer one annual payment from a bonus or RSU vest, and others prefer an automatic monthly add-on. Either way, mark the extra amount as principal only.
What happens if I skip the extra payment one year?
Nothing bad happens. Extra payments are optional, so skipping one simply means your payoff date moves back a little. Every extra payment you already made keeps saving interest. Resume when your budget allows, and you will still finish well ahead of the original schedule.
Do extra mortgage payments make sense if I plan to sell soon?
Less so. If you sell in a few years, the extra principal comes back to you as equity at closing, but you give up flexibility in the meantime and save only a few years of interest on it. Extra payments do the most good on a home you plan to keep for the long run. If you are likely to move, building savings or investing is often the better use of the money.
Ready to Run Your Own Extra Mortgage Payment Numbers?
An extra mortgage payment is simple, flexible and completely in your control. The only question is what it does for your loan, and that depends on your balance, your rate and how far along you are. Send me those three numbers and I will show you the payoff date, the interest saved and how it compares with a recast or a refinance. Everything is subject to a full loan estimate and underwriting approval.
Let’s map your payoff date.
Your balance, your rate, your timeline, laid out side by side so you can decide with confidence.
Keith Akada, NMLS #112443, The Mortgage Reel
Phone: (206) 601-3426
Email: keith@mortgagereel.com
Website: themortgagereel.com
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Explore financing a home in Seattle, King County home loans and Snohomish County home loans. Compare a lump-sum payment with a Seattle mortgage refinance, or check whether refinancing a Snohomish County home makes sense first. This article is general education, not tax, legal or investment advice, and every figure here is an illustrative estimate rather than a quote. Equal Housing Opportunity. Keith Akada, NMLS #112443. Fairway Independent Mortgage Corporation, NMLS #2289.