Should You Pay Extra on Your Mortgage?

For most homeowners, a mortgage is their biggest debt. Making extra payments — whether monthly or in a lump sum — can save thousands in interest and help you pay off your mortgage faster. But before you start sending extra money to your lender, it’s important to ask: Is paying off your mortgage early the best financial move for you?

Benefits of Making Additional Payments on Your Mortgage

Save Money on Interest
Every extra dollar goes straight to your principal balance, which reduces the total interest you’ll pay. Even small extra monthly payments can cut years off your loan amount.

Pay Off Your Home Faster
Eliminating a monthly mortgage payment frees up your budget for retirement savings, educational costs, or everyday living expenses.

Build Equity Quickly
Extra payments increase your home equity faster. This can be helpful when applying for a home equity loan, refinancing, or selling your home.

When Extra Payments Might Not Make Sense

High-Interest Debt First
If you have credit card balances or personal loans, pay those off first. Their rates are usually much higher than mortgage rates.

Emergency Savings
Don’t sacrifice your emergency fund. Experts recommend three to six months of expenses before focusing on mortgage repayment.

Investment Opportunities
With a low fixed-rate mortgage, your money might grow faster in a retirement account or investment portfolio.

Prepayment Penalties
Check your mortgage agreement for fees that could offset the benefits of making extra home loan payments.

Ways to Make Extra Mortgage Payments

  • Biweekly payments: Pay half your mortgage every two weeks. This adds up to 13 full payments per year instead of 12.
  • Rounding up: Add $50 or $100 to your monthly payment. Even small increases make a difference.
  • Lump-sum payments: Apply tax refunds, bonuses, or windfalls directly to your principal.
  • Recasting: Make a large payment and request a loan recast to reduce monthly payments while keeping the same rate and term.

How to Decide What’s Right for You

  • Compare your mortgage interest rate with other debts or potential investment returns.
  • Review your financial goals: debt-free living, building wealth, or preparing for emergencies.
  • Use a mortgage payment calculator to see how much you could save.

The Bottom Line

Paying extra on your mortgage loan can be smart — but only if it fits your overall financial plan. For some, it means saving thousands in interest over the life of the loan. For others, keeping cash available or investing elsewhere makes more sense.

At ProFed Credit Union, we help members balance mortgage payoff strategies with other financial goals. Whether you’re interested in paying off your home early, investing, or simply lowering monthly costs, our team is here to help.

Contact ProFed today to explore home mortgage solutions, savings options, and easy ways to reach your financial goals.