What Making 3 Extra Mortgage Payments a Year Actually Does
"Just make one extra payment a year" is common advice. Three extra payments a year is less common — and the results are dramatic enough to be worth seeing in actual numbers rather than as a vague promise.
- On a $320,000 loan at 6.5%, three extra payments a year cuts the term from 30 years to about 18.
- Total interest drops from $408,142 to $221,514 — a saving of roughly $186,600.
- That's about $506/month extra, or one full payment every four months.
- Extra payments only work this way if they're applied to principal — you usually have to specify that explicitly.
The actual numbers
Take a $320,000 loan at 6.5% on a 30-year term. The standard payment is $2,023/month in principal and interest. Adding three extra payments per year — an extra $6,068 annually, or about $506/month — changes the picture substantially:
Payoff drops from 360 months to 215 months — roughly 12 years earlier.
Why the effect is so disproportionate
In the early years of a mortgage, most of each payment goes to interest, not principal. An extra payment applied entirely to principal skips ahead on the amortization schedule — eliminating not just that balance, but every future interest charge that balance would have generated. The earlier in the loan you do it, the more compounding interest you cancel.
This is also why the same three extra payments made in year 20 would save dramatically less: by then, most of the interest has already been paid.
Three payments a year vs. one lump sum
A common related question: is it better to make three extra payments spread across the year, or one lump sum of the same total amount? Spreading them out is marginally better, because each payment starts reducing your balance sooner — but the difference is small. The far more important factor is when in the loan's life you make them, not how you space them within a given year.
If a lump sum (a bonus, a tax refund) is what's realistic for you, that's still overwhelmingly better than not paying extra at all.
The critical detail: specify "apply to principal"
This trips up a lot of people. Sending your servicer extra money doesn't automatically reduce your principal — many will apply it to your next payment instead, effectively just paying ahead, which saves you almost nothing in interest.
- Look for a "principal only" or "additional principal" field when paying online.
- If mailing a check, write "apply to principal" on the memo line.
- Check your next statement to confirm the balance actually dropped by the extra amount.
When paying extra isn't the best move
Extra mortgage payments are a guaranteed return equal to your interest rate — at 6.5%, that's a solid, risk-free return. But a few things usually come first:
- High-interest debt. Credit card debt at 20%+ costs far more than a 6.5% mortgage saves.
- Employer 401(k) match. An immediate 50–100% return beats 6.5% by a wide margin.
- An emergency fund. Money paid into your mortgage isn't easily accessible — unlike savings, you can't withdraw it if you lose your job.
- PMI removal timing. If you're close to 80% LTV, extra payments can also eliminate PMI sooner, adding an extra benefit on top of the interest savings.
Run your own numbers
The figures above assume a specific loan and rate. Use the extra payment calculator below with your actual balance, rate, and whatever extra amount is realistic for you — the payoff-date and interest-saved figures update as you change them.
How we verify this: figures on this page are computed from standard published formulas and checked against our own calculators. Assumptions are stated inline. Found an error? Let us know — see our editorial approach.