There are several ways to pay your mortgage off early. You can make additional principal payments each month, make larger principal payments when your cash flow allows, or consider a shorter loan term.
But knowing how to pay your mortgage off early is only half of the conversation.
The other question is whether putting additional money toward your mortgage makes sense alongside your savings, retirement, other debt, and the rest of your financial goals.
How Does Paying Extra Principal Shorten a Mortgage?
When you took out your mortgage, it came with a repayment schedule based on your loan amount, interest rate, and loan term.
Paying additional principal reduces your balance faster than originally scheduled. With a typical amortizing mortgage, that lower balance means less interest accrues going forward.
Over time, additional principal can mean paying less interest over the life of the loan and becoming mortgage-free sooner.
What Are the Ways to Pay Off a Mortgage Early?
The approaches work the same way underneath: more principal, sooner. What changes is how you choose to make those additional payments.
Add a Set Amount Each Month
You can add a consistent amount to your regular payment and designate it as additional principal.
Make Occasional Additional Principal Payments
Instead of adding money every month, you can make larger principal payments when it works for your cash flow. That might be once a year or when you receive a bonus, tax refund, commission, or other extra cash.
What About Biweekly Payments?
Paying half your mortgage payment every two weeks results in 26 half-payments each year, the equivalent of 13 full payments instead of 12.
It's the additional principal, not the biweekly schedule itself, that can shorten the loan.
Before using this strategy, check how your servicer handles partial payments. Some servicers hold partial payments until a full payment is received, and some third-party biweekly programs charge fees.
Paying Extra vs. Refinancing to a Shorter Term
Another option is refinancing into a shorter loan term. The difference is that the faster payoff becomes part of your required payment.
Keeping your existing mortgage and voluntarily paying additional principal leaves the acceleration in your control rather than building it into a new required payment.
Neither approach is automatically better. Refinancing also requires qualifying for a new loan and generally involves closing costs.
By refinancing your existing loan, your total finance charges may be higher over the life of the loan.
Before You Start
Confirm how your servicer applies additional principal and check your loan documents for any prepayment restrictions. Making additional principal payments generally doesn't reduce your required monthly payment or allow you to skip future payments.
What Determines How Much Extra Principal Changes Your Payoff?
The effect of extra principal depends on several things working together:
When you make the additional principal payment matters. Principal you reduce earlier has more time to affect the interest that accrues over the remaining life of the loan.
That's why the same additional payment can have a different effect depending on your mortgage and when you begin.
Because these factors all interact, a general rule can only tell you so much.
The useful question isn't what an extra $250 does to somebody else's mortgage. It's what it does to yours.
But before you start sending every available dollar toward principal, there's another question worth answering. Should you?
Should I Pay Off My Mortgage Early?
Owning your home outright can be a meaningful goal. No mortgage payment. Less interest over time. One major monthly obligation gone.
But every dollar you send toward principal is a dollar that can't do something else at the same time.
What Else Could This Money Be Doing for You?
Suppose you have an extra $500 available each month and you're considering putting all of it toward your mortgage.
Hypothetical example for illustration only. Your numbers will be different.
Before you do, it's worth looking at what else is competing for that same $500.
You don't have to pick one and ignore the rest.
Maybe part of that $500 goes toward principal and the rest supports other priorities. Maybe the mortgage waits until your reserves are where you want them.
Instead of asking how much extra you could put toward your mortgage, ask how much you can comfortably put toward it while still supporting the rest of your plan.
You Don't Have to Decide Forever
Choosing to pay extra principal isn't a lifetime commitment.
As your income, expenses, and goals change, the amount can change too. You can increase it, reduce it, pause it, or redirect it when something else needs the money.
If you work with a financial advisor, retirement and investment decisions belong in that conversation too. I'm always glad to help with the mortgage side.
Home Equity Isn't the Same as Cash
When you pay additional principal, you reduce the amount you owe against your home, which increases your equity.
If you later sell, that additional equity can affect the amount you receive from the sale after paying off the mortgage and other transaction costs.
Until you sell, accessing that equity generally means borrowing against your home through something like a home equity line of credit or cash-out refinance, and that depends on qualifying at the time you need it.
That's one more factor to consider when deciding how much cash you want to put toward home equity and how much you want to keep accessible.
Let's Look at Your Strategy
You understand how additional principal works. The next question is how much, if anything, makes sense to put toward your mortgage alongside everything else you're working toward.
Talk Through Your NumbersFrequently Asked Questions
Does paying extra on my mortgage lower my monthly payment?
Generally, no. Making additional principal payments doesn't change your required monthly payment. Instead, the additional principal reduces your balance faster and can shorten your payoff timeline.
Does paying extra still help if I sell before my mortgage is paid off?
It can. Extra principal increases your equity, which can affect what you receive when you sell, but until then that equity stays in your home rather than in your accounts.
Should I pay off my mortgage before I retire?
Some homeowners want to enter retirement without a mortgage payment. Others prefer to keep more savings accessible. The answer depends on your retirement income, savings, and other goals, so it's a good question to work through with your financial advisor.