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See the table below for an example of how the interest fee and loan balances changed over time with regular payments.
Example of how mortgage payments amortize over time
| Month | Loan balance | Principal paid | Interest paid |
| 1 | $239,588 | $412 | $600 |
| 88 | $199,518 | $512 | $500 |
| 180 | $146,521 | $644 | $368 |
| 360 | $0 | $1,009 | $3 |
After 30 years of monthly payments, you’d pay a cumulative total of $124,666 in interest and the loan balance in full.
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Adding to your regular payment pays off your mortgage sooner
What happens if you pay an extra $100 every month toward the same loan’s principal balance? Two things: you pay less in overall interest, and you pay off your loan faster. That’s because the extra payments accelerate paying down the mortgage balance, which in turn reduces interest fees.
According to Freddie Mac’s Extra Mortgage Payments Calculator, you’d save $18,828 in total interest by the time you pay off the loan in our example. You’d also pay off the balance four years earlier than if you didn’t add an extra $100 to your monthly payment.
Pros of paying off your mortgage early
More than 40% of homeowners don’t have a mortgage. Imagine not having that monthly bill staring at you, more cash for vacations, hobbies, or just treating yourself to extra fun. Paying off your loan early can get you there sooner, giving you freedom and peace of mind. Here’s why it pays off to accelerate your home loan payments and join this enviable group:
Pay less interest over the life of the loan
By paying off your mortgage loan early, you’ll save on interest expenses over the life of the loan. Depending on your loan terms and the amount you prepay, your savings could add up to thousands of dollars, keeping more money in your pocket over the long term.
Free up cash for other purchases or investments
In 2024, homeowners who relocated while carrying a mortgage had a median monthly payment of $2,225, which includes only principal and interest payments. Additional expenses, such as homeowners’ insurance, property taxes, and homeowners association (HOA) fees, further increase the total cost of homeownership.
Now, imagine the financial freedom of having no mortgage payment. Without that monthly obligation, you could redirect those funds toward investments that accelerate your path to early retirement or perhaps even fund a dream vacation to Tahiti.
When you’re mortgage-free, cash that was once budgeted for mortgage payments can be used toward other financial goals, says Moore.
Gain peace of mind
If you’re risk-averse, paying off your mortgage early may take a weight off your mind, knowing that you own your home outright. “For some, the peace of mind that comes with being debt-free far outweighs any financial benefits,” says Moore.
Limbird agrees, adding that while there may be reasons why it’s better not to pay off your mortgage early, “for some people … it’s almost a sense of accomplishment to have your home paid for.”
Transform your financial outlook and mindset
A staunch advocate for paying off all debt regardless of the type, financial guru Dave Ramsey recommends venturing into investment properties to accelerate wealth after paying off your home loan, not before. When you pay off your mortgage, Ramsey says, “It changes the way you operate the rest of your money because you’re standing on such a more solid foundation to live your life.”
