One Extra Mortgage Payment a Year: The Impact on Your Payoff Timeline

The idea is almost too simple to believe: make one extra mortgage payment per year, and your 30-year loan dies in roughly 26 years. No budget overhaul. No lifestyle sacrifice. Just one extra payment, once a year, every year. Here's why it works and how to make it automatic.

The math on a typical loan

Loan: $375,000 at 6.8% for 30 years. Monthly payment: $2,447. One extra payment of $2,447 per year, applied to principal. New payoff: 26.3 years. Interest saved: $68,400. That's $68,000 saved for the cost of roughly one month's payment annually — often covered by a tax refund alone.

Where the extra payment comes from

• Tax refund — average refund in 2026 is $3,000, more than enough
• Annual bonus — even a small bonus often covers one payment
• Side income — one month of tutoring, freelancing, or selling items
• Expense seasonality — skip a month of discretionary spending
• Gift or inheritance — even partial amounts compound

When to send it

Earlier is better. An extra payment in month 6 saves more interest than the same payment in month 200 because it reduces the balance for more remaining months. But the best time is whatever you can sustain. January (tax refund season) works for most people because the money arrives predictably.

Make sure it goes to principal

This is the most common and most expensive mistake. If you send an extra payment without specifying 'principal only,' many servicers treat it as an early regular payment — advancing your due date but not reducing the balance. Always write 'apply to principal' on the check or memo line, or call to confirm.

The snowball version

Start with one extra payment this year. Next year, add a second. The year after, a third. Each extra payment compounds the benefit. By year 5, you're making 5 extra payments per year and your payoff date is shrinking fast. The psychology of small annual increases is easier than a large monthly commitment.

Model it yourself

Enter your loan details and one annual lump sum into the Mortgage Payoff Calculator. It will show your exact new payoff date and total interest saved. Try increasing the lump sum by $500 each year to see the snowball effect.