Two Extra Mortgage Payments a Year Can Save You $64,000

Jamie Ayers's Photo
By Jamie Ayers Updated October 21, 2021


Your mortgage is likely your largest expense, and you probably aren’t looking forward to paying it off for the next 30 years. But by making just two extra payments per year, you can be free from your mortgage significantly faster and save tens of thousands of dollars in interest. Here’s how it works.

FHA mortgage

If you find yourself with extra income, paying off your debts can be a rewarding and profitable enterprise. The higher the interest rate on your loans, the more money you stand to gain by clearing the debt quickly.

The mortgage on your home likely has a relatively low-interest rate, but the principal is so high and the loan term so long that you’ll end up paying tens of thousands of dollars in interest over its lifetime.

If you can afford more than the minimum monthly payment, you can diminish the accumulation of interest on your mortgage and reap significant savings. In addition, making extra payments will allow you to pay off your loan a lot faster — so you can start living debt-free as soon as possible.

How 2 Extra Payments a Year Can Save You $56,000

There are lots of ways to prepay a mortgage — lump sum injections, biweekly payments, and formal refinancing, to name a few. For simplicity’s sake, this example spreads the addition of 2 extra mortgage payments per year onto 12 standard monthly payments.

Let’s say you purchase a home for $250,000 and put 20% down. That translates to a mortgage principal of $200,000, which in this example will be paid off over a 30-year term at a 5% interest rate. If you make monthly mortgage payments of $1,073.64, after 30 years you’ll have paid down the principal as well as an additional $186,511.57 in interest.

But look what happens when you add 2 extra monthly payments per year, starting in year one. This is equivalent to 12 slightly-higher monthly payments of $1,252.85 — but this small difference is enough to pay off your full debt in just 22 years and cost you only $129,712.85 in interest.

In other words: two extra mortgage payments per year will save you eight years and $56,798.72 in interest.

Of course, you don’t have to put in exactly this amount every year to save money. The following chart shows how much you would save on this particular mortgage by adding different amounts to each of your monthly payments:

Extra Monthly Payment

Years to Pay Off Mortgage

Total Interest Saved Over Lifetime of Mortgage


30 years



29 years, 5 months



28 years, 6 months



24 years, 10 months



22 years



15 years, 2 months


So, Should You Prepay Your Mortgage?

As you can see, it doesn’t take a lot to save extra money on your mortgage. Adding just ten dollars to your monthly payments — the cost of a Netflix subscription — will save you almost $5,000 over 30 years. And the more you add, the more you save.

The math doesn’t lie: paying off your mortgage at an even moderately accelerated schedule can save you thousands of dollars in interest. These savings are a guaranteed return that offers peace of mind and increased equity in your most important asset — your home.

However, if you have the surplus income to be making extra payments, you may want to consider other investment options as well. You might decide that investing extra cash is worth more than saving on mortgage interest, even if the savings are considerable. Also, note that your lender may have special restrictions or fines when it comes to prepaying your mortgage — so you want to really understand the terms of your loan before making a decision.

If you think extra mortgage payments could make sense for your financial situation, consult with a Clever Partner Agent who can offer personalized advice and help you better understand your options.

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