If you’re like most homeowners, your mortgage is one of your biggest monthly expenses—but there are easy and effective ways to pay down the principal faster and save money.
Understand the Principal
Your principal is the original amount you borrowed to buy your home—not including interest, taxes, or insurance. Each time you make a mortgage payment, part of it goes toward reducing your principal, while the rest covers interest.
When you pay more toward your principal, you save in two important ways:
- Pay Off Your Mortgage Faster: Early in your loan term, most payments go toward interest rather than principal. Extra contributions toward principal reduce your balance faster, potentially cutting years off your loan and saving thousands in interest.
- Reduce Interest Charges Sooner: Because interest is based on your remaining loan balance, additional contributions immediately reduce how much interest you owe—so you start saving money even before you pay off your loan.
Make Progress with These Mortgage Payoff Strategies
Pay a Little Extra Each Month
One simple way to speed up your mortgage payoff is to add a little more to your monthly payments. Even $50 or $100 more each month can make a big difference over time.
A helpful trick is to round up your payment. For example, pay $1,500 instead of $1,435. That additional $65 each month can make a surprising difference over the life of your loan.
It’s a good idea to confirm with your lender that the extra funds go directly toward your principal—not future interest or scheduled payments. Some lenders require notification or have prepayment penalties.
Make Biweekly Mortgage Payments
Instead of one monthly payment, make half-payments every two weeks. Over a year, this equals 13 full payments instead of 12—accelerating your payoff without much strain on your budget.
Make sure that the additional payment goes straight to your principal.
- Talk to your lender. Some lenders require you to enroll in a specific program; others may not allow bi-weekly payments.
- Do it yourself. If your lender doesn’t offer biweekly payments, you can still get the same effect by making one extra principal-only payment each year or by slightly increasing your monthly contributions to equal 13 months of payments annually.
- Skip third-party services. These companies often charge fees for something you can set up yourself with your lender.
Use Windfalls to Reduce Your Principal
A tax refund, work bonus, or unexpected cash gift can help you make a dent in your loan balance if applied directly to your principal. Even a one-time lump sum can reduce your balance and future interest. Just remember to tell your lender how to allocate the extra payment.
Save Money, Build Equity, and Own Your Home Sooner
Whether your goal is to pay off your home years ahead of schedule or simply save more on interest, these strategies can help you take control of your mortgage—and your financial future. Small, consistent steps today can lead to big savings tomorrow.
We’re Here to Help!
Ready to learn more about your home loan options, such as automatic payments or refinancing? Visit our Mortgage Loans page, or contact a member of our friendly and knowledgeable Mortgage Loan Team.
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