One extra payment a year on a 30-year loan can shave off 4–5 years and tens of thousands in interest. The math is brutal — in your favour.
Google this topic and you will get a hundred answers, half of them wrong. Here is the version that holds up. One extra payment a year on a 30-year loan can shave off 4–5 years and tens of thousands in interest. The math is brutal — in your favour.
Extra payment applied to principal reduces the base for future interest. Compounds in reverse.
Treats 13 payments as 12. Shortens 30-year mortgage to ~25 years.
Round monthly payment to the next $100. Small effort, real impact.
Bonus or tax refund? Apply directly to principal — best return of the year.
Should I prepay mortgage or invest? Compare your mortgage rate to expected investment return after tax. Above 6% mortgage rate, prepayment is competitive.
Does prepayment lower my monthly? No — it shortens the loan. Recasting (different process) lowers monthly.
The math is the easy part. Acting on what it tells you is where the real win lives.