How to Pay Off Your Mortgage Early
7 min read · Updated September 26, 2026 · by Thomas M, Registered Investment Adviser (South Carolina)
Paying a mortgage off early can save a large amount of interest, but how much depends on your balance, rate and how much extra you pay. The idea is simple: extra money goes straight to principal, which reduces the balance interest is charged on, for every month after. This guide shows the maths and gives real examples.
How a mortgage actually gets repaid
Each month, interest is the balance times the monthly rate. Whatever is left of the payment reduces the balance. Early in the loan, most of the payment is interest; late in the loan, most is principal. Extra principal early removes balance that would have charged interest for decades.
Worked example: $200 extra a month
A $250,000 balance at 6.5% with 27 years left has a scheduled payment of $1,638.89. Add $200 a month and the payoff time drops to 20 years 7 months: 6 years 5 months sooner, saving $77,121.46 of interest ($280,999.53 down to $203,878.06).
Worked example: a lump sum
Instead of monthly extras, apply a $20,000 bonus now: $77,821.21 saved and 4 years 11 months off the term. Early money works hardest.
Biweekly payments
Paying half the monthly payment every two weeks makes 26 half-payments — 13 full payments a year instead of 12. That extra payment per year is equivalent to adding one-twelfth of your payment each month: here 4 years 9 months sooner.
Before you send extra money
- Check for prepayment penalties.
- Tell your servicer the extra is for principal.
- Build an emergency fund and clear high-interest debt first — a 6.5% mortgage is rarely the best target when a card charges 22%.
- Compare with investing: your guaranteed return is the mortgage rate.
This is general education, not financial advice.
Practice questions
Test yourself, then tap to check. Answers are calculated by the tools linked below.
- A $180,000 balance at 5.5% with 22 years left. How much interest does an extra $150 a month save?
Show answer
Payoff time with extra payments: 17 years 9 months · Time saved: 4 years 3 months · Interest saved: $28,610.88
- A $450,000 home, 10% down, 7% rate, 30 years. What is the monthly principal and interest?
Show answer
Monthly payment (principal + interest): $2,694.48
- You owe $250,000 at 6.8% with 25 years left. A new 25-year loan at 5.8% costs $5,000 to arrange (paid upfront). What is the monthly saving and break-even?
Show answer
New monthly payment (principal + interest): $1,580.33 · Monthly change: $154.85 lower · Break-even point: 33 months (2 years 9 months)
Frequently asked questions
How much interest can extra payments save?
It depends on balance, rate and term; the worked example shows one case, and the payoff calculator gives your own number.
Is it better to pay a lump sum or monthly extras?
Earlier principal reductions save more, so a lump sum applied now beats the same total paid over time — but monthly extras are easier to sustain.
Will extra payments reduce my monthly payment?
No. They shorten the loan; the required payment stays the same unless you recast or refinance.
Should I pay off my mortgage or invest?
Compare the mortgage rate (a guaranteed saving) with your expected, uncertain investment return, along with your risk tolerance and emergency fund. A professional adviser can help.
Try it yourself
Mortgage Payoff CalculatorSee how extra monthly payments or a lump sum shorten your mortgage and how much interest you save.Mortgage CalculatorEstimate a monthly mortgage payment, total interest and total cost.Mortgage Refinance CalculatorSee whether refinancing saves money: new payment, monthly saving, break-even month and total cost compared with keeping your loan.Keep learning
How Mortgage Payments Work7 min readHow to Calculate Your Mortgage Refinance Break-Even Point7 min readHow Compound Interest Works7 min readReviewed by Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Spot a mistake? Tell us. See our editorial policy. Finance content is educational and not financial advice; see the disclaimer.