How Much Will Biweekly Mortgage Payments Save You Money

How much will biweekly mortgage payments save you money? Imagine a simple shift in how you pay your mortgage that could shave years off your loan and save you thousands in interest. It’s a powerful strategy that many homeowners overlook, turning a long-term commitment into a much shorter, more affordable journey. This isn’t just about paying bills; it’s about strategically building wealth and gaining financial freedom sooner than you might think.

By understanding the mechanics of biweekly payments, you unlock a clear path to accelerating your principal repayment. This method essentially squeezes an extra monthly payment into your year, a seemingly small change that has a significant impact on your loan’s amortization schedule. The core benefit lies in consistently chipping away at the principal balance more aggressively, which directly translates into less interest paid over the life of your loan.

Understanding Biweekly Mortgage Payments

Embrace a powerful strategy to conquer your mortgage debt faster and build lasting financial freedom. Understanding biweekly mortgage payments is the first step on this transformative journey, unlocking the potential for significant savings and a quicker path to homeownership. This approach isn’t just about making payments; it’s about strategically optimizing your financial resources to work harder for you.The core concept of a biweekly mortgage payment plan is elegantly simple yet profoundly effective.

Instead of adhering to the traditional monthly payment schedule, you commit to making a mortgage payment every two weeks. This seemingly small adjustment in frequency creates a powerful ripple effect, leading to accelerated principal reduction and substantial interest savings over the life of your loan.

Biweekly Payment Schedule Versus Monthly

The fundamental difference lies in the number of payments made annually. A traditional monthly mortgage payment means you make 12 payments per year. In contrast, a biweekly payment plan, by its very nature, involves making a payment every two weeks.

Frequency of Biweekly Payments in a Calendar Year

When you divide the 52 weeks in a calendar year by two, you arrive at a clear and compelling number: 26 biweekly payments. This is equivalent to making 13 full monthly payments each year, rather than the standard 12. This extra payment, made strategically, is the engine driving the accelerated payoff.

The Primary Benefit: Accelerating Principal Repayment

The ultimate advantage of a biweekly mortgage payment strategy is its direct impact on your loan’s principal balance. Each extra payment you make, in essence, goes directly towards reducing the principal amount you owe. This is crucial because mortgage interest is calculated on the outstanding principal balance. By reducing the principal faster, you not only shorten the loan term but also significantly decrease the total amount of interest paid over the life of the mortgage.

This accelerated repayment builds equity more rapidly, strengthening your financial foundation and moving you closer to the ultimate goal of being mortgage-free.

Calculating Potential Savings: How Much Will Biweekly Mortgage Payments Save

The journey to financial freedom is paved with smart decisions, and understanding how to optimize your mortgage payments is a monumental step. By strategically adjusting your payment schedule, you unlock the power to significantly reduce the total interest paid and shorten the life of your loan. This section is your roadmap to quantifying those savings, empowering you with the knowledge to make informed choices that benefit your financial future.

Let’s dive into the mechanics of how biweekly payments can transform your mortgage from a lifelong burden into a manageable stepping stone.The core principle behind biweekly mortgage savings lies in making an extra mortgage payment each year. While it might seem like a small adjustment, the cumulative effect over time is profound. We’ll explore the exact methods to calculate these savings, understand the impact on your loan’s amortization schedule, and demystify the process of turning potential into tangible financial gains.

Estimating Total Interest Saved

Unlocking the true potential of biweekly payments begins with a clear understanding of how much interest you can save. This isn’t just a theoretical exercise; it’s a powerful motivator that can solidify your commitment to this payment strategy. By following a structured approach, you can accurately project the reduction in your total interest outlay over the life of your mortgage.Here’s a step-by-step procedure to estimate your total interest savings:

1. Determine your current mortgage details: You’ll need your original loan amount, your annual interest rate, and the original loan term in years.
2. Calculate your current monthly payment: Use a standard mortgage payment formula or an online calculator. The formula is:
   

   M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

   Where:M = Monthly paymentP = Principal loan amounti = Monthly interest rate (annual rate divided by 12)n = Total number of payments over the loan’s lifetime (loan term in years multiplied by 12)

3. Calculate the total interest paid with your current schedule: Multiply your monthly payment by the total number of payments (n) and then subtract the original principal loan amount (P). Total Interest = (M
   • n)
   • P.
4. Determine your biweekly payment amount: Divide your current monthly payment by two. This is the amount you will pay every two weeks.
5. Calculate the total number of biweekly payments per year: There are 52 weeks in a year, so you will make 52 / 2 = 26 biweekly payments.
6. Calculate the total annual payment under the biweekly plan: Multiply your biweekly payment amount by 26. This will be equivalent to 13 monthly payments (26 biweekly payments / 2 = 13 monthly payments).
7. Estimate the new loan term with biweekly payments: This is where a specialized mortgage amortization calculator or a more complex iterative calculation is often used, as the extra principal payments accelerate the payoff. However, a good approximation can be made by understanding that you are effectively making one extra monthly payment per year. Many online biweekly mortgage calculators can provide this precise figure.
8. Calculate the new total interest paid with the biweekly plan: Once you have the new loan term and the total number of biweekly payments, you can calculate the total amount paid. The total amount paid will be your biweekly payment multiplied by the total number of biweekly payments in thenew*, shorter loan term. The new total interest paid is this total amount paid minus the original principal loan amount.

9. Calculate the total interest saved: Subtract the new total interest paid from the original total interest paid. Interest Saved = Original Total Interest – New Total Interest.

This systematic approach provides a tangible figure, demonstrating the significant financial advantage of adopting a biweekly payment strategy.

Reducing the Loan Term with Extra Principal Payments

The magic of biweekly payments isn’t just about paying more; it’s about paying smarter. By consistently making slightly larger payments than required monthly, you’re directing more money towards the principal balance of your loan. This strategic reduction of the principal has a direct and powerful effect on shortening your loan term, saving you years of payments and substantial interest.The core principle is that interest is calculated on the outstanding principal balance.

When you reduce that balance more quickly, the amount of interest accrued in subsequent periods also decreases. This creates a snowball effect, accelerating your path to full loan repayment.Here’s a formulaic illustration of how extra principal payments reduce the loan term:Let:P = Original Principal Loan Amounti = Monthly Interest RateM = Regular Monthly PaymentWhen you switch to a biweekly payment plan, you effectively pay half of your monthly payment every two weeks.

Embracing biweekly mortgage payments can significantly reduce your overall interest paid, a wise stewardship of your financial resources. While exploring options, you might wonder who offers 40 year mortgage , but remember that even with standard terms, accelerating payments through biweekly contributions unlocks substantial savings, bringing you closer to financial peace.

This results in 26 half-payments per year, which equates to 13 full monthly payments annually. The extra full monthly payment is applied directly to the principal.The impact on the loan term can be visualized by understanding that each extra principal payment chips away at the principal balance more aggressively than a standard amortization schedule. While a precise formula for the new loan term without iterative calculations is complex, the principle can be illustrated:Consider a loan where the principal is reduced by an additional amount (let’s call it E) each month, beyond the standard principal portion of the regular payment.

The new loan term (n’) can be approximated or calculated iteratively. The general idea is that the outstanding balance at any given point is lower, leading to less interest accrual and a faster payoff.A simplified way to conceptualize this is by observing how many additional full monthly payments are made. If you make 13 monthly payments instead of 12, you are essentially making one extra payment per year.

This extra payment, when applied to the principal, directly reduces the outstanding balance, thereby shortening the loan term.For example, on a 30-year mortgage (360 payments), making an extra payment each year can shave off 5 to 7 years from the loan term, depending on the interest rate and the loan amount. This accelerated payoff is a direct consequence of consistently applying more funds to the principal.

Impact on Mortgage Amortization

An amortization schedule is a table that details each monthly mortgage payment, breaking it down into the principal and interest components. Understanding how biweekly payments alter this schedule reveals the true power of this payment strategy. With a standard monthly payment, a larger portion of your early payments goes towards interest, with only a small fraction reducing the principal. Biweekly payments flip this dynamic.The primary impact of a biweekly payment schedule on amortization is the accelerated reduction of the principal balance.

Because you are making the equivalent of one extra monthly payment per year, this additional amount is applied directly to the principal. This means:

• Earlier Principal Reduction: A larger portion of your payments goes towards reducing the principal balance from the outset.
• Lower Outstanding Balance: As the principal is reduced more quickly, the outstanding balance on your loan decreases at a faster rate.
• Reduced Interest Accrual: Since interest is calculated on the outstanding principal, a lower balance means less interest accrues over the life of the loan.
• Shorter Loan Term: The combination of faster principal reduction and less interest accrual leads to paying off your mortgage in fewer years.

To illustrate, imagine a standard amortization schedule where the principal reduction in the early years is modest. With a biweekly plan, the principal reduction column in your amortization schedule will show significantly larger numbers in those same early years. This “front-loading” of principal payments is what drives the substantial interest savings and the shortened loan term. Many online mortgage calculators can generate a comparative amortization schedule, visually demonstrating this accelerated payoff.

Calculating Annual Payments with a Biweekly Plan

Understanding the total number of payments made annually with a biweekly plan is a straightforward yet crucial step in grasping the mechanics of this savings strategy. It forms the basis for calculating the total amount paid each year and, consequently, the total interest saved over the life of the loan.With a biweekly payment plan, you are making a payment every two weeks.

Since there are 52 weeks in a year, the calculation is as follows:Total number of payments annually = 52 weeks / 2 weeks per paymentThis results in:Total number of payments annually = 26 paymentsThis means that instead of making 12 monthly payments, you will be making 26 half-payments, which is equivalent to making 13 full monthly payments over the course of a year.

This extra payment is what directly contributes to reducing your principal balance faster and saving you a significant amount of interest over the life of your mortgage.

Factors Influencing Savings

The power of biweekly mortgage payments isn’t a one-size-fits-all phenomenon; its true impact is sculpted by several key financial variables. Understanding these influences allows you to truly grasp the potential for accelerated debt freedom and significant interest savings. It’s about recognizing how the bedrock of your loan – its principal, interest rate, and lifespan – interacts with the strategic advantage of making those extra payments.Each element plays a crucial role, acting as a multiplier or a modulator for the savings you can achieve.

Let’s delve into how these fundamental aspects of your mortgage shape the financial landscape of your biweekly payment strategy, empowering you to make informed decisions on your path to financial mastery.

Loan Principal Amount

The initial principal amount of your mortgage is the bedrock upon which all interest is calculated. A larger principal means a larger pool of money on which interest accrues over time. Consequently, the savings realized from biweekly payments, which effectively reduce this principal faster, will naturally be more substantial on higher principal loans. Think of it as diverting a more significant stream of funds to pay down a larger debt; the impact is proportionally greater.For example, consider two individuals, both with a 30-year mortgage at a 5% interest rate, making biweekly payments.

If one has a principal of $200,000 and the other $400,000, the individual with the $400,000 loan will see a dramatically larger absolute dollar amount saved in interest and a shorter payoff period simply because there was more principal to attack. The biweekly strategy becomes a more potent tool for debt reduction when the initial debt burden is higher.

Mortgage Interest Rate

The interest rate on your mortgage is a direct determinant of how much you pay for the privilege of borrowing money. A higher interest rate means a larger portion of your monthly payment goes towards interest, especially in the early years of the loan. Biweekly payments, by accelerating principal reduction, directly combat the accumulation of this interest. The higher the interest rate, the more impactful each extra principal payment becomes, leading to a greater overall reduction in the total interest paid over the life of the loan.This is where the true magic of biweekly payments shines.

Imagine a loan with a 7% interest rate versus one with a 3% interest rate, both with the same principal and term. The loan at 7% accrues interest at a much faster pace. By making biweekly payments on this higher-rate loan, you’re effectively cutting off a larger amount of potential interest from being paid, leading to significantly more savings compared to the lower-rate loan, even if the principal amounts are identical.

The higher the interest rate, the more you stand to gain by aggressively reducing your principal through biweekly payments.

Loan Term

The duration of your mortgage, whether it’s a 15-year or a 30-year term, profoundly influences the savings potential of biweekly payments. Shorter-term mortgages already have a more aggressive payment schedule, meaning you’re paying down principal faster and paying less interest overall. When you add the biweekly payment strategy to a shorter term, the acceleration is even more pronounced, leading to a faster payoff and substantial interest savings, though the absolute dollar amount saved might be less than on a longer-term loan with a higher principal due to the inherent interest savings of the shorter term itself.Conversely, a 30-year mortgage offers a longer runway for interest to accrue.

Implementing biweekly payments on a 30-year loan is where you often see the most dramatic reduction in the total interest paid and a significant shortening of the loan term. For instance, a 30-year loan paid biweekly can often be paid off in roughly 22-25 years, saving tens of thousands of dollars in interest.

Comparison of Savings Potential for Different Loan Scenarios

To truly appreciate the impact of these factors, let’s compare a few hypothetical scenarios.

Scenario	Principal	Interest Rate	Term	Estimated Interest Savings (Biweekly vs. Monthly)	Estimated Years Saved (Biweekly vs. Monthly)
Scenario A: First-Time Homebuyer	$250,000	4.5%	30 Years	~$60,000 – $70,000	~5-7 Years
Scenario B: Larger Home Purchase	$400,000	5.0%	30 Years	~$100,000 – $120,000	~6-8 Years
Scenario C: Shorter Term, Higher Rate	$300,000	6.0%	15 Years	~$40,000 – $50,000	~2-3 Years

These figures are illustrative and can vary based on specific loan structures and payment processing. However, they clearly demonstrate the amplified savings on higher principal amounts and higher interest rates, as well as the significant impact of biweekly payments on accelerating payoff for all loan types. The key takeaway is that the biweekly strategy is a powerful tool for financial liberation, and its effectiveness is amplified by the inherent characteristics of your mortgage.

Practical Implementation and Considerations

Embarking on the journey of biweekly mortgage payments is a strategic move towards financial freedom and accelerated homeownership. This isn’t just about making payments; it’s about unlocking the power of consistent, accelerated principal reduction. By understanding the practical steps and potential nuances, you can confidently implement this powerful strategy and witness your mortgage debt melt away faster than you ever thought possible.Transitioning to a biweekly payment plan requires diligence and clear communication with your mortgage lender.

It’s a commitment to your financial future, a proactive step that pays dividends over time. Let’s delve into how to make this powerful financial tool work for you, navigating the landscape of lender processes, potential costs, and alternative strategies.

Setting Up a Biweekly Payment Plan with Your Lender

The most direct path to a biweekly payment plan is through your current mortgage lender. This ensures that your extra payments are correctly applied to the principal, maximizing your savings. The process typically involves a few key steps to formalize the arrangement.

Here’s a guide to initiating a biweekly payment plan with your mortgage lender:

• Contact Your Lender: Reach out to your mortgage servicer, either by phone or through their online portal. Inform them of your intention to switch to a biweekly payment schedule.
• Understand Their Program: Inquire about their specific biweekly payment program. Lenders often have automated systems designed for this. Ask how the payments are processed and if there are any specific forms or agreements required.
• Formal Agreement: You may need to sign a new agreement or addendum to your existing mortgage contract. This document will Artikel the terms of the biweekly payment plan, including the payment amounts and frequency.
• Payment Allocation: Crucially, confirm that the extra amount paid each month (half of your monthly mortgage payment, paid every two weeks) will be applied directly to the principal balance. This is the cornerstone of the savings strategy.
• Automatic Payments: Most lenders will require you to set up automatic payments for the biweekly plan. This ensures consistency and avoids missed payments, which could negate the benefits.

Common Pitfalls to Avoid

While the benefits of biweekly payments are substantial, there are potential missteps that can hinder your progress or even lead to unintended consequences. Being aware of these common pitfalls allows you to navigate the transition smoothly and ensure your efforts translate into real savings.

Guard yourself against these common issues:

• Lender Misapplication of Funds: The most critical pitfall is having your extra payments applied to future interest or escrow instead of the principal. Always verify this with your lender.
• Informal Arrangements: Simply sending in half your payment every two weeks without a formal agreement can lead to the lender treating it as a partial payment and potentially incurring late fees.
• Ignoring Lender Fees: Some lenders might charge a fee for setting up or administering a biweekly payment plan. Understand these costs upfront.
• Forgetting the “Principal” Application: Even with a formal plan, it’s wise to periodically review your mortgage statements to ensure the extra payments are consistently reducing your principal balance.
• Overspending Due to Perceived Savings: While you’re paying down debt faster, the actual cash outflow per month is only slightly higher. Avoid the temptation to increase discretionary spending based on this perceived “extra” cash.

Potential Fees and Charges

Lenders may offer formal biweekly payment programs, but it’s essential to scrutinize these for associated costs. While some programs are designed to be beneficial, others might include fees that could offset some of the savings. Understanding these potential charges empowers you to make an informed decision.

Be aware of these possible fees:

• Setup Fees: Some lenders charge an initial fee to enroll you in their biweekly payment program.
• Administrative Fees: There might be a small recurring fee charged monthly or annually for managing the biweekly payment schedule.
• Late Fees (if not properly set up): If your biweekly payments aren’t correctly processed or if you miss a payment due to a misunderstanding of the plan, you could still be subject to late fees.
• Processing Fees: In rare cases, a lender might charge a small fee for each biweekly transaction.

It’s imperative to ask your lender for a detailed breakdown of any fees associated with their biweekly program before committing. Compare these fees against the potential savings to ensure the plan remains advantageous.

Alternative Methods for Extra Principal Payments

If your lender doesn’t offer a formal biweekly plan, or if you prefer a more hands-on approach without lender-administered programs, there are highly effective alternative methods to accelerate your principal payments. These strategies give you greater control and can be just as, if not more, beneficial.

Consider these robust alternatives:

• Manual Biweekly Payments: The simplest alternative is to divide your monthly mortgage payment by two and set up automatic transfers for this amount every two weeks. Crucially, ensure that when you make these payments, you explicitly designate the extra funds as “principal only.” Many online banking systems allow you to add notes to your payments.
• Annual Lump Sum Extra Payment: Make one extra full monthly mortgage payment each year. You can achieve this by saving up an extra monthly payment throughout the year and submitting it as a lump sum, or by simply adding it to one of your regular payments. Again, clearly earmark this payment as “principal only.”
• “Bi-Quarterly” Payments: Pay your mortgage one-and-a-half times your normal monthly payment every other month. This also results in an extra payment per year.
• Rounding Up Payments: Consistently round up your mortgage payment to the nearest hundred or even thousand dollars. For example, if your payment is $1,530, pay $1,600. The difference ($70) goes directly to the principal.

Regardless of the method chosen, the key to success with these alternatives is consistency and clear communication with your lender regarding the allocation of funds. Always ensure that any extra amount paid is explicitly directed towards reducing the principal balance of your mortgage. This disciplined approach will undoubtedly accelerate your path to becoming mortgage-free.

Illustrating Savings with Examples

The true power of biweekly mortgage payments lies not just in theory, but in tangible results. By understanding how this simple shift in payment schedule can dramatically alter your financial trajectory, you unlock a powerful tool for wealth building and debt freedom. Let’s dive into the concrete numbers and compelling narratives that showcase the profound impact of embracing a biweekly payment strategy.

Comparative Analysis of Payment Plans

To truly grasp the savings, we must compare the traditional monthly payment approach with the accelerated biweekly method. This comparison will highlight the reduction in both the total interest paid over the life of the loan and the significantly shortened loan duration. Imagine the freedom of shedding years, even decades, from your mortgage obligation.Consider a sample mortgage of $300,000 with a 30-year term at a 5% annual interest rate.A traditional monthly payment plan would involve paying approximately $1,610.46 each month.

Over 30 years, this equates to:

• Total Payments: $579,765.60
• Total Interest Paid: $279,765.60
• Loan Duration: 30 years

Now, let’s transform this with a biweekly payment plan. By paying half of your monthly payment every two weeks, you effectively make one extra monthly payment per year. This seemingly small adjustment creates a powerful snowball effect. For our sample mortgage, this would mean paying approximately $805.23 every two weeks.With the biweekly plan:

• Total Payments: Approximately $477,000
• Total Interest Paid: Approximately $177,000
• Loan Duration: Approximately 24.5 years

The difference is staggering. In this single example, you save over $100,000 in interest and shave off more than five years from your mortgage term. This is not just a number; it’s years of your life freed from debt, more money in your pocket, and the accelerated path to financial independence.

Principal Reduction Progression Over Time

The magic of biweekly payments is amplified by how it impacts your principal balance. Early in a mortgage, a larger portion of your payment goes towards interest. By making more frequent payments, you attack the principal balance much faster, leading to a compounding effect on your savings.The following table illustrates the principal reduction progression for the sample mortgage over the first five years:

Year	Monthly Payment – Principal Remaining	Biweekly Payment – Principal Remaining
End of Year 1	$293,650.00	$289,500.00
End of Year 2	$286,800.00	$277,400.00
End of Year 3	$279,400.00	$264,500.00
End of Year 4	$271,400.00	$250,700.00
End of Year 5	$262,750.00	$236,000.00

As you can see, by the end of year five, the biweekly payment plan has reduced the principal balance by over $26,000 more than the monthly plan. This difference continues to grow exponentially, leading to the substantial interest savings and shortened loan term we discussed earlier. This is the power of consistent, accelerated principal reduction.

Long-Term Financial Advantages of Early Mortgage Payoff

The benefits of paying off your mortgage early extend far beyond the immediate financial relief. It’s about building a foundation of long-term financial security and creating opportunities you never thought possible. Imagine the freedom of directing thousands of dollars annually, previously earmarked for mortgage payments, towards other vital financial goals.Early mortgage payoff through biweekly payments liberates your cash flow. This freed-up capital can be strategically deployed for:

• Accelerated retirement savings: Compounding returns on investments over a longer period can significantly boost your retirement nest egg.
• Funding children’s education: Secure your children’s future without the burden of student loans or the need to deplete other savings.
• Investing in other assets: Diversify your wealth through real estate, stocks, or other ventures, creating multiple streams of income.
• Enjoying a higher quality of life: With less financial pressure, you can afford to travel, pursue hobbies, or simply enjoy more discretionary spending.

This proactive approach to debt management is not just about saving money; it’s about reclaiming your financial future and empowering yourself to live a life of greater freedom and choice.

Psychological and Financial Benefits of Being Mortgage-Free Sooner, How much will biweekly mortgage payments save

The psychological impact of owning your home outright cannot be overstated. It’s a profound sense of accomplishment and security that transcends mere financial figures. Imagine the peace of mind that comes with knowing you have no looming mortgage payments, no creditor knocking at your door for this significant debt.Consider Sarah, a homeowner who implemented a biweekly payment plan. Within 15 years, she had paid off her 30-year mortgage.

This meant:

• Financial Freedom: Sarah no longer had a $2,000 monthly mortgage payment. She redirected this $24,000 annually towards her retirement, travel, and a significant down payment on a rental property.
• Reduced Stress: The constant underlying anxiety associated with a large mortgage was replaced with a feeling of liberation and control. She slept better at night knowing her biggest financial obligation was gone.
• Increased Net Worth: Her net worth surged as the equity in her home became fully realized, and she continued to build wealth through her new investments.
• Legacy Building: Sarah was able to leave a substantial inheritance for her children, unburdened by her own mortgage debt.

This scenario illustrates that the benefits of early mortgage payoff are not just about numbers on a spreadsheet. They are about transforming your life, reducing stress, and creating a legacy of financial well-being for yourself and your loved ones. The decision to embrace biweekly payments is a powerful step towards achieving this liberating reality.

Ultimate Conclusion

In essence, embracing a biweekly mortgage payment plan is a smart, actionable way to take control of your financial future. It’s a tangible strategy that allows you to significantly reduce the total interest you pay and become mortgage-free years ahead of schedule. By understanding the calculations, considering the influencing factors, and implementing the plan thoughtfully, you can unlock substantial savings and the profound peace of mind that comes with early homeownership completion.

Key Questions Answered

What exactly is a biweekly mortgage payment?

A biweekly mortgage payment means you pay half of your monthly mortgage payment every two weeks. Since there are 52 weeks in a year, this results in 26 half-payments, which equals 13 full monthly payments instead of the usual 12.

How does paying biweekly save money?

The extra full monthly payment made each year goes directly towards your principal balance. Reducing the principal faster means less interest accrues over the life of the loan, leading to significant savings and a shorter loan term.

Can I set up biweekly payments with any lender?

Most lenders offer biweekly payment plans, but it’s crucial to confirm. Some may have specific programs or fees associated with them, while others might allow you to simply make extra principal payments manually.

Are there any fees involved with biweekly payments?

Some lenders charge a fee for setting up and managing a formal biweekly payment plan. It’s important to ask about any potential administrative fees to ensure the savings outweigh the costs.

What if my lender doesn’t offer a biweekly plan?

You can achieve similar results by making extra principal payments yourself. A common method is to divide your monthly payment by 12 and add that amount to your regular payment each month, or to make one extra full principal payment per year.