Blog
How Much Should I Put Toward My Mortgage Each Month?
Summary
Extra principal payments reduce the balance faster and cut total interest. There’s no required amount; it’s a tradeoff between paying off the loan sooner and using the money elsewhere.
Your monthly mortgage payment is set when you take out the loan. But you’re usually allowed to pay more than the minimum. Any extra that goes toward principal (not toward next month’s payment or escrow) reduces the balance. A lower balance means less interest over the life of the loan and often an earlier payoff date.
There’s no rule for how much extra to pay. Some people add a fixed amount each month; others add a full payment once a year or when they get a bonus. The key is to tell the lender (or make sure the payment is applied) that the extra is for principal.
When extra payments make sense
If your rate is high, or you really want to own the home free and clear, extra payments can be very satisfying. If your rate is low and you’re comfortable with debt, you might prefer to invest the difference. Use a Mortgage Affordability Calculator to see your current payment; for payoff timing with extra payments, a dedicated amortization or payoff tool can show the impact.
Definitions
- Principal
- The amount you borrowed. Extra principal payments reduce the balance and the interest you pay over time.
FAQ
Will one extra payment a year help?
Yes. Making one extra principal payment per year (or splitting it into 12 smaller additions) can shorten a 30-year loan by several years and reduce total interest. The effect depends on your balance and rate.
Should I pay extra on my mortgage or invest?
If your mortgage rate is low, investing the extra money could historically earn more over time. But paying down the mortgage guarantees a “return” equal to the interest you avoid and reduces debt. It’s a personal choice based on rate, risk tolerance, and how you feel about debt.