When buying a home for the first time, most people need to take out a mortgage that will last anywhere from 15 to 30 years. But if you can make just one extra mortgage payment a year, it could not only save you thousands of dollars but could also take several years off your loan.

How to make extra mortgage payments

Let’s say you get extra money throughout the year in the form of an inheritance, a work bonus, or a tax refund. Let your loan company know that you would like to put that payment toward the principal loan amount. Instead of making a monthly payment 12 separate times in one calendar year, you’d make 13 instead.

Alternatively, if you get a raise at work or are expecting to earn more money than in previous years, you can budget extra money to go toward your existing mortgage payment amount each month throughout the year.

How much can you save by paying more of your mortgage?

If you have a $200,000 mortgage with a 3.6 percent interest rate, you’ll end up paying over $327,000 to pay off both the principal loan and interest over the course of 30 years. Your monthly payment at that rate would be around $909.

But if you were to bump that payment up by around to $999, you could pay the loan off four and a half years early. Paying around just $90 a month is roughly equal to one extra mortgage payment a year. If you prefer to pay in one lump sum, you’d just add a 13th payment of $909 at the end of the year.

By making the extra mortgage payment, you would also save over $21,000 over the life of the loan that would have just gone to interest. You can use tools like Nerdwallet’s early mortgage payoff calculator to see how increasing your payments will affect your loan.

Sometimes when you have a smaller down payment, you must also take out private mortgage insurance (PMI). Typically, until you have paid 20 percent of the principal amount, you must also pay this amount every month. By putting more toward your principal loan, you could save thousands on your PMI.

Why you might not want to prepay your mortgage

If you have other forms of debt with high interest rates, like credit card debt, you should focus on paying that down first. You should also prioritize maxing out any retirement investments like a 401(k), which come with a lot of tax benefits.

While interest rates are low, it might also make more sense to invest any extra money you have rather than putting it toward paying off a fixed-rate mortgage. You may also choose to refinance your loan instead.

And perhaps most importantly, check with your mortgage provider to see if there are any penalties for paying off your loan early. Even if there is an extra charge for it, the savings you get from paying it off early might still make the early payments worth it.

As with most financial decisions, every person’s circumstances are different and the choice can be highly personal.