What Happens If I Pay 2 Extra Mortgage Payments A Year?

What Happens If I Pay 2 Extra Mortgage Payments A Year?

Mortgages are among the most confusing and overwhelming debts you will ever face. Truth be told, nobody really knows how mortgages work. Sure, you’ve sorted out a monthly mortgage payment plan so you know how much to budget for bills and food and other expenses, but what happens if you find that you’ve still got money left over? 

Mortgage Payment

If you’re new to paying back your mortgage, or perhaps you’ve only ever stuck to paying one mortgage payment every month, you might be wondering: is it possible for me to pay more than my monthly mortgage? Surely it would mean that I’ve got fewer debts to pay off in the long-run, right? And if this is possible, what happens if I pay 2 extra mortgage payments a year?

Here is everything you need to know about paying extra mortgage payments each year! 

Can I Pay Extra Mortgage Payments?

The simple answer to this question is: yes! You can pay extra mortgage payments. If anything, it’s actually advised that you pay extra mortgage payments as often as you can. Nobody really wants to spend the next 30 years of their life paying back a mortgage like it’s rent, so if you can afford to pay extra each month, then you should.

What Happens If I Pay 2 Extra Mortgage Payments A Year?

If you think you have the funds to pay 2 extra mortgage payments a year, this can save you potentially thousands of dollars in interest. That’s right – not only will paying extra payments shorten the lifespan of your mortgage, but it will also save you a lot of money from the pesky interest fees.

Let’s give you an example. Say you’ve just put down a 20% deposit for a $250,000 home. 20% of this figure is $50,000, which means your remaining mortgage is $200,000. The mortgage plan you are following means that you will have 30 years to pay off your mortgage with 5% interest. When we separate this into monthly payments, this works out at $1,073.64 a month.

After 30 years, not only will you have finished paying your mortgage amount, but you will have also paid $186,511,57 in interest.

That’s quite a huge figure in interest, isn’t it? It’s basically your mortgage doubled.

However, if you were to pay 2 extra mortgage payments every year, this will increase your monthly payments to $1,252.85. While this doesn’t sound like a huge increase from the regular monthly payment, this increase means you can pay off your whole mortgage within just 22 years. Plus, you will only have to pay $129,712.85 in interest!

In most cases, 2 extra payments a year will be split into extra monthly payments rather than 2 separate extra payments for the sake of paying the same amount monthly.

Remember that this is just an example! In reality, not everyone can commit to paying 2 extra mortgage payments every year until the mortgage is paid off completely.

The beauty of paying back your mortgage is that you have full control over when you can afford to pay extra and when you can only afford your regular monthly payments. So, it might not reduce the 30-year mortgage to 22 years exactly, but even committing to some yearly extra payments will help reduce your mortgage and interest payments overall.

When To Make Extra Mortgage Payments?

The best time to commit to making extra mortgage payments is towards the start of your mortgage/ If you begin to make prepayments within the first 1-2 years of living in your new home, you will literally shave years off your mortgage!

If you start to make prepayments after living in your home for 10 or so years (let’s say halfway through the mortgage payment), you might not reap the benefits compared to if you started paying extra years ago.

By this point, you will have already paid half of your mortgage and half of the total interest, but it’s always better late than never to start paying extra!

Should I Pay Extra Mortgage Payments?

The reality is that it’s totally up to you whether you want to pay extra mortgage payments. The house and mortgage is yours, after all, so it all comes down to whether you can afford to prepay your mortgage.

Luckily, there’s no pressure to commit to prepaying your mortgage every single month for a number of years. You can increase the amount you prepay, you can decrease the amount you prepay, and you can control these expenses however you like.

While some might not see the point in prepaying a mortgage if it means you’re spending more each month, you’ve got to look at the main benefits.

Prepaying a mortgage contributes to a decrease in the interest paid and the lifespan of the mortgage itself. Even if you can only pay extra mortgage payments for six months, two years, or five years, this will still mean that you’re saving a lot of money in the long-run.

Of course, you should only make extra mortgage payments if you can afford it. There’s no point in paying more than you need to if you’re struggling to enjoy life in your own home. It’s your house and your mortgage, after all, so your priority is to live as comfortably as you can.

You’ve also got to discuss any potential extra payments with your lender. Some lenders will have restrictions on how much you can prepay monthly, because if it turns out that you can definitely afford to pay more than you already are, then they could increase your mortgage payment.

Some lenders also have special fines for extra payments, so keep this in mind and make sure you understand the terms of your loan.


So, there you have it! If you can afford to pay 2 extra mortgage payments a year, you will save thousands of dollars in interest. Not only this, but it will shave years off your total mortgage payments. 

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