4.5 years saved
The math behind extra mortgage payments
Each extra mortgage payment reduces the principal immediately and saves interest on every remaining month. The savings depend on the interest rate, the time remaining, and the size of the payment. A formula approximation: extra payment × rate × remaining years × 0.5 = lifetime interest saved. Early payments save dramatically more because more compounding months remain.
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Key takeaways
04 · ideas- Extra $100/month on a $300k 6% mortgage saves $62,000 and 4.5 years
- One extra payment per year achieves similar results to biweekly payments
- Front-loaded amortization means early extra payments are 3x more valuable than later ones
- The break-even vs. investing depends entirely on your mortgage rate
Every dollar of extra payment on a mortgage goes directly to principal — skipping all future interest that would have accrued on that dollar.
Why this is powerful: On a 30-year mortgage at 6%, every $1 you pay in principal today saves you $1 × (30 remaining years × 6%) = potentially $1.80 in interest. The earlier in the loan, the more interest you skip.
$300,000 mortgage at 6% for 30 years (monthly payment: $1,799):
| Extra payment | Interest saved | Years saved |
|---|---|---|
| $50/month | $32,000 | 2.3 years |
| $100/month | $62,000 | 4.5 years |
| $200/month | $112,000 | 8.0 years |
| $500/month | $211,000 | 14.5 years |
| One lump sum $5,000 in year 1 | $18,000 | 1.3 years |
These savings are tax-free (you're not earning interest, you're avoiding a cost). For most people, prepaying a 6%+ mortgage is an excellent risk-free return.