The short answer
One extra mortgage payment a year is one of the simplest ways to pay off a 30-year mortgage years early. On a $400,000 loan at 6.5%, one extra $2,528 payment each year cuts about six years and saves between $112,000 and $121,000 in interest. The range comes down to timing: paid in January, it saves about $8,800 more than the same payment made in December.
How one extra payment a year works
A 30-year mortgage has 12 payments a year. Add a 13th, sent straight to principal, and you've lowered your balance by an extra $2,528 that the bank can no longer charge interest on.
Do that every year, and the effect stacks. Each year's extra payment cuts the interest on every payment that follows. By the end, you've shaved years off the loan without ever changing your regular payment.
If you want to see what a yearly extra payment would do on your own balance and rate, a free payoff projection will show you.
What it saves
On a $400,000, 30-year mortgage at 6.5%, the regular payment is $2,528 and the total interest is $510,178.
| How the extra $2,528 a year is paid | Paid off in | Interest saved |
|---|---|---|
| Each December | 24 years, 4 months | $111,979 |
| Split into 12 monthly pieces of $211 | 24 years, 2 months | $116,342 |
| Each January | 24 years, 1 month | $120,737 |
Same money every year. A different result depending on when it arrives.
Why January beats December
Interest is charged every month on what you owe. Money that reaches principal in January stops being charged interest for eleven more months than money that arrives in December.
Over one year, that's a small difference. Over 24 years, it adds up to about $8,800.
You don't need to obsess over the calendar. But if you have the money early in the year, there's no reason to wait. And if you're choosing between sending a tax refund to the mortgage in March or holding it until December, March wins.
This is the same principle behind every strategy in our guide to extra mortgage payments: earlier dollars save more.
Who this strategy fits best
One extra payment a year suits people whose income comes in lumps.
Yearly bonuses. Send all or part of it to principal before it disappears into everyday spending.
Commission or seasonal income. Set aside a small amount after each strong month, then send it together once it adds up to a full payment.
Tax refunds. A refund that arrives in spring is a ready-made extra payment.
If your income is steady, the monthly version is usually easier to stick with. Adding one twelfth of your payment to every monthly payment gets nearly the same result. If you're paid every two weeks, biweekly mortgage payments do this automatically.
Mistakes to avoid
Not labeling the payment. If you send an extra $2,528 without marking it as principal, some servicers apply it as next month's payment. You save nothing, and you may even skip a payment without meaning to.
Waiting too long. Saving all year to make the payment in December works. Making it in March works better. Don't let a good intention drift.
Raiding the emergency fund. A yearly payment can be large. Make sure sending it doesn't leave you without three to six months of expenses in savings.
We cover these and others in mortgage payoff mistakes.
Add it to everything else you're doing
One extra payment a year works well alongside other strategies. Combine it with a small monthly extra, and the savings grow fast. For every option side by side, see how to pay off your mortgage faster.
If you're carrying car loans or credit cards at high rates, though, those usually come first. The Zero Debt Method is built for households with several balances.
A different kind of strategy
Extra payments, whether yearly or monthly, all depend on sending the mortgage more money. Ridgewell's Mortgage Accelerator Program is designed differently, by changing how your mortgage is structured so the income you already have does more of the work. For qualifying households, it is designed to pay off a home in as little as 5 to 7 years.
Payoff timelines are illustrations for qualifying households and are not guaranteed.
Where to start
Look at your calendar for the next money that isn't already spoken for: a bonus, a refund, a strong month. Decide now that it goes to principal, and send it the week it arrives.
To see how much a yearly extra payment would save on your own loan, get a free payoff projection from a licensed agent.
Examples assume a $400,000, 30-year fixed mortgage at 6.5%, principal and interest only, with figures rounded.
