Got extra cash? Here's when experts say it's best to make a lump-sum mortgage payment

If you have some extra cash, making a lump-sum payment on your mortgage can save you a lot of money. Experts say it’s wise to do this before your mortgage interest rate goes up. That way, you reduce the principal amount that interest is calculated on, which could help you manage higher costs when it’s time to renew.

Another smart time to make an extra payment is when your mortgage is up for renewal. A lump payment before that moment builds more equity in your home and can keep your monthly payments from jumping too much if interest rates climb.

But don’t rush into it without checking your mortgage terms. Some lenders allow only a certain amount—usually around 10% of the balance—without charging a fee. Paying more than that could cost you penalties, so always check your agreement or ask your lender first.

Financial experts also warn that it's not always wise to throw all your savings at your mortgage. You should have enough money in an emergency fund—typically three to six months of living expenses—so you're not left unprepared if something unexpected happens.

Some homeowners with flexible or offset mortgages can make large lump-sum payments and still access those funds later. This gives you the benefit of reducing your mortgage interest without sacrificing liquidity—useful if you need cash quickly.

In short, the best times to make a lump-sum payment are before a rate renewal or when interest could rise. Just make sure you’re within your lender’s rules and have a healthy emergency fund in place. Do that, and your extra cash can work hard for you—reducing interest, building equity, and protecting you from future rate shocks.