How Extra Principal Payments Can Reduce Mortgage Interest

Paying additional money toward your mortgage principal can reduce future interest and help you pay off a standard amortizing loan sooner. The results depend on your balance, interest rate, remaining term, and the amount and timing of extra payments.

Add Extra Principal to Your Monthly Payment

One approach is to make your regular payment plus an additional amount designated for principal.

To spread the equivalent of one extra principal-and-interest payment across a year, divide your monthly principal-and-interest payment by 12 and add that amount each month.

For example, if your principal-and-interest payment is $1,800, adding $150 in extra principal each month totals $1,800 over a year.

This example excludes taxes, insurance, and escrow deposits. Actual savings vary.

Make a One-Time Principal Payment

A bonus, gift, or other available funds may provide an opportunity to reduce your mortgage balance.

Before making a large payment, consider your emergency savings, upcoming expenses, and other financial priorities. Money paid toward principal generally cannot be withdrawn without selling the property or obtaining additional financing.

Understand Biweekly Payments

A biweekly plan typically collects half a monthly payment every two weeks. Over a typical year, 26 half-payments equal 13 full monthly payments.

Paying twice each month is different: 24 half-payments equal only 12 full monthly payments.

Before enrolling, ask your servicer about fees, payment timing, and how the additional amount is applied. Do not simply send half-payments without confirming the arrangement. Partial payments may be held until enough money is received for a full payment.

Make Sure Extra Funds Go Toward Principal

Contact your mortgage servicer—the company receiving your payments—to confirm:
• How to designate an extra principal payment.
• Whether your loan has any applicable prepayment penalty.
• Whether your account must be current before extra funds can reduce principal.
• When the payment will be applied.

Review your statement afterward to confirm the principal reduction. Continue making your required payments on time.

Will Your Required Payment Decrease?

On a standard fixed-rate mortgage, extra principal payments generally shorten the repayment period rather than automatically reducing your required monthly principal-and-interest payment.

A lower required payment may be possible through a lender-approved recast on an eligible loan. Availability, minimum payment amounts, and fees vary by loan and servicer.

We Can Help You Explore the Numbers

Platinum Advantage Mortgage can help illustrate how additional principal payments may affect your repayment schedule. Projections depend on stated assumptions and are not guaranteed results.

Call 407-341-4313 or email rjolley@platinumadm.com.

Please use our designated secure process to submit mortgage statements or sensitive financial information. Confirm payment instructions and loan-specific requirements directly with your servicer.