See how making extra payments on your mortgage saves thousands in interest and years off your loan.
Every dollar of extra principal payment reduces your outstanding balance, which reduces the interest charged in all future months. Because of this compounding effect, even modest extra payments early in a mortgage can save tens of thousands in interest and cut years off the loan term.
Extra payments are most impactful in the early years of a mortgage, when more of each regular payment goes to interest. Making extra payments in years 1–5 provides significantly more benefit than the same payments made in years 20–25.
Switching from monthly to bi-weekly payments (half your monthly payment every two weeks) results in 26 half-payments = 13 full payments per year instead of 12. This one extra payment per year typically saves 4–6 years on a 30-year mortgage with no noticeable change to your budget.