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HOMEBUYER RESOURCES
Paying down your mortgage faster can reduce the total amount of interest you pay and help free up money for other priorities in your life.
Even small changes to your payment frequency, payment amount or amortization period can make a meaningful difference over the life of your mortgage.
PAY LESS INTEREST
There are many benefits to shortening your mortgage amortization period and reducing the cost of borrowing.
Paying off your mortgage sooner can free up money for other priorities, such as your children’s education, retirement savings or an emergency fund.
REPAYMENT STRATEGIES
Depending on the terms of your mortgage, there may be several ways to reduce your principal sooner and lower the amount of interest you pay over time.
Increase the frequency of your mortgage payments. Paying biweekly or weekly instead of monthly can reduce annual interest costs.
A larger down payment reduces the amount you need to borrow and can substantially reduce the time it takes to repay your mortgage.
Many mortgages allow you to make an annual payment of up to 10%, 15% or 20% of the original mortgage amount without penalty.
These payments are applied directly to the principal and can reduce your annual interest costs.
When your financial circumstances allow, consider applying extra money directly to your mortgage principal.
If your mortgage permits it and your budget allows, doubling a regular payment can help reduce the principal more quickly.
Many lenders allow borrowers to increase their regular mortgage payment by up to 10%, 15% or 20% once each year.
The additional amount is applied directly toward the principal.
A shorter amortization period means higher regular payments, but you can pay substantially less interest over the life of the mortgage.
If interest rates are lower when you renegotiate your next mortgage term, consider keeping your mortgage payment at its previous amount.
More of each payment can then be applied directly toward the principal.
KNOW YOUR MORTGAGE TERMS
Mortgage prepayment options vary by lender and product. Before making additional or larger payments, confirm the prepayment privileges included in your mortgage agreement and whether any limits or penalties apply.