Accelerate Mortgage Repayment to Save on Interest: Four Strategies to Cut Costs

Accelerate Mortgage Repayment to Save on Interest

Discover four effective strategies for accelerating mortgage repayment and saving on interest, helping you reduce mortgage expenses and interest costs while maintaining financial stability.

The high cost of mortgages leads many to seek methods to accelerate repayment and save on interest. This article will detail four strategies to help you accelerate mortgage repayment, where funds permit, potentially saving tens of thousands of dollars in interest.

Before applying these strategies to accelerate mortgage repayment and save on interest, ensure that your lending institution or bank does not charge a prepayment penalty. If such penalties exist, consider this cost in your calculations. Most standard mortgages do not have such penalties.

Biweekly Payment Paying

your mortgage biweekly can accelerate repayment and save on interest. Divide your monthly payment in half and pay it every two weeks. For instance, if your monthly payment is $2,000, pay $1,000 every two weeks instead. This results in an extra month’s payment each year, accelerating loan repayment and saving on interest. For example, on a $800,000 mortgage with a 30-year term and 4% interest rate, using the biweekly method can lead to paying off the loan 4 years and 1 month early, saving up to $90,000 in interest.

Monthly Extra Principal Payment

If funds are limited, consider paying an extra portion of the principal each month according to your situation. Even a few hundred or thousand dollars can significantly reduce the total mortgage amount over time and cultivate a habit of thrift. Ensure the extra amount paid is specifically applied to reducing the loan principal.

Lump-Sum Principal Payment

If you receive an extra income, consider making a lump-sum principal payment. Some banks offer loan recasting services, where after paying off part of the principal, the loan term remains the same, but the monthly payment decreases. For example, on a $200,000, 30-year mortgage at 5% interest, a monthly payment of $1,200 can be reduced by $300 by paying off $50,000 of the principal at once, ultimately saving about $35,000 in interest.


The last strategy to accelerate mortgage repayment and save on interest is refinancing. This is usually suitable for borrowers with higher mortgage interest rates. The key is to find the right timing and consider the costs of refinancing. Ideally, the new interest rate should be lower than the original loan rate, and refinancing costs are typically 2%-6% of the loan principal.

Reducing mortgage expenses is not only a way to save money but also a conservative investment and financial strategy. When extra funds are available, many choose to invest in real estate, stocks, and other areas. This requires a comprehensive consideration of the returns and risks of investments.

By implementing these methods to accelerate mortgage repayment and save on interest, you can effectively reduce your mortgage costs and enhance financial health. Choose the strategy that suits you and start your journey of savings.