Want to pay off mortgage early and reduce the amount of interest you pay over the life of your loan? A few changes to how you make your mortgage payments can help you reduce the balance faster.
The right strategy depends on your mortgage terms, budget, and financial priorities. Here are five practical ways to accelerate repayment and what to check before making extra payments.
1. Pay extra toward your principal each month
One of the simplest ways to pay off mortgage early is to add extra money to your regular payment and have your servicer apply it directly to the principal.
Your mortgage payment covers both principal and interest. As the principal balance decreases, future interest is calculated on a smaller amount. That can reduce the total interest you pay and shorten the time it takes to repay the loan.
Try rounding up your payment
You don’t need to make a large additional payment to get started.
For example:
Regular payment: $1,147
Rounded payment: $1,200
Extra each month: $53
That additional $53 can go toward your principal every month.
The important part is making sure your servicer applies the extra money to principal, rather than simply treating it as an early payment for the following month.
2. Switch to biweekly payments
Instead of making one full mortgage payment each month, a biweekly schedule divides the payment in half and collects that amount every two weeks.
Because there are 52 weeks in a year, you make:
26 half-payments
which equals:
13 full monthly payments per year
That creates the equivalent of one additional mortgage payment each year, helping reduce the principal faster.
Freddie Mac gives the example of a $250,000 30-year fixed-rate mortgage at 4.5%. Under a biweekly schedule, the loan could be paid off almost five years earlier. Your results will depend on your balance, interest rate, remaining term, and payment structure.
Check the cost first
Some servicers charge fees for biweekly payment programs.
Before signing up, check:
- Biweekly program fees
- How the servicer credits each payment
- Whether your mortgage has a prepayment penalty
You may be able to achieve a similar result by making one additional mortgage payment each year without paying for a special service.
3. Put windfalls toward your mortgage
You don’t have to increase your monthly payment to accelerate your mortgage.
A large amount of extra money can become a lump-sum principal payment.
Common examples include:
- Tax refunds
- Work bonuses
- Inheritances
- Commissions
- Other unexpected income
For example
Suppose you receive a $3,000 tax refund.
You could put some or all of that money toward your mortgage instead of increasing your required monthly payment.
This approach can be particularly useful if you have irregular income or prefer not to commit to a permanently higher monthly payment.
The benefit comes from reducing the outstanding principal sooner. Before making a large payment, confirm with your servicer that the money will be applied to principal.
4. Refinance into a shorter mortgage term
Refinancing can also help you pay off mortgage early by replacing a longer mortgage with a shorter one.
For example, a homeowner with a 30-year mortgage could refinance into a:
15-year mortgage
or
20-year mortgage
A shorter term generally means higher monthly payments, but it can also reduce the total interest paid over the life of the loan. Freddie Mac identifies moving from a 30-year mortgage to a 15- or 20-year term as one way to become mortgage-free sooner.
Compare more than the interest rate
Refinancing can involve closing costs and other expenses. Your new rate also matters, as does how long you expect to keep the home.
Before refinancing, compare:
| Cost | What to consider |
|---|---|
| Monthly payment | Can you comfortably afford the new amount? |
| Closing costs | How much will refinancing cost upfront? |
| Current mortgage | How much interest remains on your existing loan? |
| New mortgage | What will you pay over the new loan term? |
A shorter mortgage term isn’t automatically the right choice if the new costs outweigh the potential savings.
5. Make one extra mortgage payment each year
Another straightforward strategy is to make one additional full mortgage payment each year and apply it to principal.
You can either save the money throughout the year or divide the cost across your monthly budget.
A simple calculation
If your principal-and-interest payment is $1,500:
$1,500 ÷ 12 = $125
You could set aside $125 each month.
After 12 months:
$125 × 12 = $1,500
You then have enough to make one additional full payment.
This method is similar to a biweekly schedule in its overall effect, but the payment structure is different. Instead of changing the frequency of your regular payments, you deliberately budget for one extra payment during the year.
It can also be easier to manage if you prefer a predictable monthly savings target.
What to check before making extra payments
Before changing your payment strategy, review the terms of your mortgage. Three details are especially important.
Prepayment penalties
A prepayment penalty is a fee some lenders charge when a borrower pays off all or part of a mortgage early. Not every mortgage has one.
The penalty terms should be disclosed in your loan documents. In some cases, a penalty may apply when you pay off a large amount at once or refinance during the period covered by the loan terms.
Small additional principal payments do not normally trigger a prepayment penalty, according to the CFPB, but you should confirm the rules for your specific mortgage before making a large payment.
How extra payments are applied
Tell your servicer that you want additional money applied to principal.
Then check your mortgage statement to confirm that the payment was credited correctly.
This matters because simply sending more money does not necessarily tell the servicer how you want the funds applied.
Your official payoff amount
If you’re ready to pay off the entire mortgage, don’t rely only on the balance shown on your latest statement.
Your payoff amount can be different from your current balance because it may include interest through a specific date and other applicable charges. The CFPB recommends requesting an official payoff statement from your lender or servicer.
Should you pay off your mortgage early?
Paying your mortgage faster can reduce future interest and help you become debt-free sooner. Still, putting every available dollar toward the loan may not make sense for every homeowner.
Before increasing your payments, consider your other financial priorities.
Check whether you have:
- An emergency fund
- High-interest debt
- Retirement contributions
- Major upcoming expenses
- Other financial goals
It can also be useful to compare the potential benefit of reducing mortgage interest with what you could do with the same money elsewhere.
The goal is not simply to make the largest possible mortgage payment. It’s to choose a repayment strategy that fits your overall financial situation.
Frequently Asked Questions
Is it better to pay extra on a mortgage or invest the money?
There is no universal answer. Paying extra reduces your mortgage balance and future interest costs, while investing offers potential returns along with market risk.
The comparison depends on factors such as your mortgage rate, investment options, taxes, time horizon, and broader financial goals.
Should extra mortgage payments go toward principal?
Yes. If your goal is to accelerate repayment, the additional money should generally be applied to the principal balance.
Reducing principal means you owe less on the loan and future interest is calculated on a smaller balance.
Can I pay off my mortgage early without a penalty?
It depends on your mortgage. Some loans have prepayment penalties, so check your loan documents or ask your servicer before making a large extra payment.
Does paying an extra $100 a month help?
Yes. If your lender applies the additional $100 directly to principal, you reduce the balance faster than you would with scheduled payments alone.
The amount of time and interest saved depends on your loan balance, interest rate, and remaining term.
Does making biweekly mortgage payments save money?
It can. A true biweekly schedule results in 26 half-payments per year, which equals 13 full monthly payments. That additional payment can reduce principal faster and potentially lower total interest.
What is the fastest way to pay off a mortgage?
The result depends on your mortgage terms and how much extra you can afford. Larger principal payments generally accelerate repayment, while refinancing into a shorter term increases your required monthly payment. Before choosing a strategy, compare the costs, your cash flow, and the terms of your current mortgage.