It varies depending on how the lender calculates interest. If its on an annual basis, you can make a one-off payment each year, usually a litte time before the end of the lender's year (which may not be a calendar year), and which would then be taken off the principal outstanding. The lender will then re-calculate the interest on the new mortgage outstanding and notify you of the new monthly payments that will be required. More common these days is calculating interest on a daily basis and under this method, making any extra payments, at any time, will change the principal outstanding from the day after the lender receives the extra payment. This will mean that the lender will re-calculate your next monthly payment immediately and your payments will now be lower. If you regularly paid an extra amount each month, the lender would re-calculate your mortage outstanding each month and adjust your monthly payments accordingly. However, please be aware that in the early years of a mortgage, you pay almost 100% interest and a tiny amount of the principal. As the years roll, this ratio changes gradually and you pay more and more of the principal, until in the final few years, you are paying almost all principal in your monthly payment. The benefit of making extra payments, as you've stated, is to reduce the length of the mortgage term. But you also benefit considerably from not having to pay as much interest on your mortgage overall, since you will have paid off a chunk of the principal before time and thus the savings can be substantial. I think most lenders would be able to give you an illustration of how many years would be taken off the mortgage term depending on the level of extra payments you could make.