Financial Education
One Extra Mortgage Payment a Year: What It Actually Does
The math behind accelerating principal — and the honest comparison against investing the same money.
Making one additional mortgage payment each year applies extra dollars directly to principal, which shortens amortization and reduces total interest paid. On a typical 30-year loan, the effect is meaningful.
The comparison nobody runs
Paying down a mortgage produces a guaranteed return equal to your interest rate. Investing produces an uncertain return with a higher historical average and real downside risk.
Which is better is not universal. It depends on your rate, your time horizon, your tax situation, your liquidity needs and your tolerance for volatility. Prepaid mortgage principal is also illiquid — you cannot easily get it back without a refinance or sale.
Run your own numbers
Our Mortgage vs. Investing calculator compares the two hypothetical paths side by side. It is an educational mathematical comparison, not investment advice.
Next step
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