Making an additional mortgage payment each year can shorten the repayment period because the extra money can reduce your principal balance earlier than required under the normal schedule. The exact number of months or years saved depends on the original loan amount, interest rate, remaining term, and how the additional payment is made. One extra payment per year can also reduce the total interest paid because future interest is calculated on a smaller outstanding balance. However, the result will vary significantly between borrowers, especially if the extra payment is made as one lump sum versus spread throughout the year. You can test this strategy using a mortgage calculator with extra payments and compare it with your normal payment schedule. Before doing so, confirm how your mortgage servicer handles additional payments and whether there are any applicable restrictions or fees under your loan terms.
