What One Extra Mortgage Payment a Year Actually Does

One extra mortgage payment a year — just one — takes a $400,000 loan at 6.5% from a 30-year payoff to about a 24-year payoff and saves more than $110,000 in interest. You read that right: a single additional payment per year, roughly 8% more money, cuts nearly six years off the loan.

It sounds too good for how little it costs. It works because every extra dollar of principal stops accruing interest for the entire remaining life of the loan, and an early payment compounds that effect for decades. Here is exactly what it does, and the two simple ways to pull it off.

All figures come from the calculator.

The numbers

There are two common ways to make "one extra payment a year" happen, and they land in almost the same place. The first is a true annual lump — you drop one full monthly payment in once a year (say, from a bonus or tax refund). The second is biweekly: you pay half your payment every two weeks, which works out to 26 half-payments — 13 full payments — per year instead of 12. The extra is spread out, so it pays down a hair faster.

$400,000 @ 6.5%, base payoff 30 years
Method                        Interest saved   Paid off early
None (baseline)               —                —
One annual lump payment       $111,979.36      5 years, 8 months
Biweekly (spread out)         $116,341.72      5 years, 10 months

It scales with loan size:

Biweekly schedule             Interest saved   Paid off early
$300,000 @ 6.5%               $87,256.29       5 years, 10 months
$400,000 @ 6.5%               $116,341.72      5 years, 10 months
$500,000 @ 6.5%               $145,427.14      5 years, 10 months

Run the $400k biweekly scenario.

Why biweekly beats the annual lump (slightly)

Both methods add roughly one payment a year, but biweekly sends a little extra principal every month rather than all at once each year. Money applied in January avoids more interest than the same money applied in December, so spreading it out pays off about two months sooner — $116,341.72 saved versus $111,979.36. The difference is small; the important point is that either one works, and the gap to doing nothing is six figures.

The two ways to do it

Option 1 — Biweekly, automated. Set up payments of half your monthly amount every two weeks. The cleanest way is to do it yourself through your servicer's portal or your bank's bill pay; you get the same result as a paid "biweekly program" without the enrollment fee. Watch out for third-party services that charge $300–$400 to set this up — you can do it free. The biweekly mechanics, including the once-a-year math, are covered in depth in Biweekly vs. Monthly Mortgage Payments: A Real Comparison.

Option 2 — One annual lump. Once a year, send one extra payment as "principal only." This is ideal if your income is lumpy — a year-end bonus, a tax refund, a commission check. You decide each year whether you can afford it, which keeps it flexible. The catch is that it relies on you actually doing it; automation beats willpower, so if you choose this route, calendar it.

A subtle but critical detail for both: the extra must be applied to principal, not parked as "next month's payment." More on that below.

Make sure it actually hits principal

This is where the strategy quietly fails for a lot of people. If your servicer applies the extra money to "next month's payment" instead of principal, you get none of the benefit — you have just paid ahead, and next month's interest is calculated the same way.

• Use the payment option labeled "principal only" or "additional principal" in your servicer's portal.
• If you cannot find it, call and ask precisely which field reduces principal.
• Verify on your next statement: the extra should appear as its own principal line, and the following month's interest charge should drop.

Is one extra payment a year the right move?

It is one of the best guaranteed returns available if your situation is in order. Before accelerating the mortgage, make sure you have:

1. A 3–6 month emergency fund (equity is hard to access in a pinch).
2. Captured your full employer 401(k) match (an instant 100% return).
3. Paid off anything above ~8% APR (credit cards especially).

At a 6.5% mortgage rate, an extra payment is effectively a guaranteed 6.5% after-tax return — excellent. If your rate is under ~5%, investing the money instead may win on expected value, though many people still prepay for the certainty.

The bottom line

One extra mortgage payment a year — whether spread out biweekly or dropped in as a single annual lump — cuts about 5.5 to 6 years off a 30-year loan and saves well over $100,000 in interest on a typical $400k mortgage. Biweekly edges out the annual lump because the money arrives sooner, but the real gap is between doing something and doing nothing.

See your own numbers on the calculator (toggle "Pay biweekly" or add an extra amount), read the biweekly deep dive, or compare extra-payment levels on the comparison page.