How extra payments work on a mortgage
Early in a mortgage, most of each payment goes to interest. Extra money applied to principal shrinks the balance right away, so every later month charges less interest. The savings are largest when you start early.
A simple way to pay extra
One extra monthly payment per year is the same as adding about one twelfth of your payment each month. Enter that amount above to see the effect. Make sure your lender applies the extra to principal and doesn’t hold it for the next due date.
Things to check first
Look for a prepayment penalty in your loan terms, which is uncommon but possible. In the US, conventional loans with private mortgage insurance can usually drop it once you reach 80 percent of the home’s original value, so extra payments can help there too. If your rate is low, compare paying extra with other uses for the money, such as an emergency fund or higher-interest debt.