At today’s mortgage rates, a small $200 monthly change could wipe five years off a 30-year home loan – and save the equivalent of a luxury car in interest.
For a homeowner with a $500,000 mortgage at 6 percent interest, that simple tweak could mean saving more than $100,000 and becoming mortgage-free years earlier – without refinancing.
Traditionally, homeowners have put spare cash at the end of the month into savings accounts.
But savings rates have fallen markedly, with even the best dropping to 3.5 percent in recent months – well below the long-term average of 8.4 percent.
At the same time, more Americans now have mortgages carrying an interest rate above 6 percent than those with one under 3 percent after several years of high rates.
Experts say this should prompt homeowners to rethink where their spare dollars work hardest – and that will likely be going toward paying off their home.
In fact, mortgage professionals practically lined up to tell the Daily Mail that paying off a home loan early is more than just a satisfying financial milestone.
When approached strategically, it can be one of the most powerful wealth-building decisions a homeowner makes.
Sean Bloch, an executive at Block Financial Resources
Interest is front-loaded, and that creates opportunity
Many borrowers do not realize how mortgage payments are structured.
In the early years of a typical 30-year loan, most of your monthly payment does not go toward reducing the balance you actually owe. Instead, you’re largely paying interest.
This is because interest is calculated on the remaining loan amount, and at the beginning, that balance is at its highest.
That structure – known in the industry as amortization – simply means the loan is set up so you pay more interest at the start and more of the balance later.
As Miami-based mortgage broker Philip Bennett explains: ‘In the first years of a 30-year mortgage, the majority of the payment goes toward interest rather than principal. That’s simply how these loans are structured.’
Because interest is calculated on what you still owe, every extra dollar applied to the principal – the amount actually borrowed – immediately lowers the balance the lender can charge interest on going forward.
‘Adding even $100 to $300 per month toward principal can reduce the total interest paid by tens of thousands of dollars and shorten the loan term by several years,’ Bennett said. ‘The earlier the overpayment begins, the greater the benefit.’
Sean Bloch, an executive at Block Financial Resources, said many homeowners underestimate how quickly this snowballs.
‘When you make additional payments toward the principal balance, you immediately reduce the amount the lender can charge interest on going forward. That is where the real savings begin,’ he explained.
‘Even making one extra payment per year can cut years off a loan and save tens of thousands of dollars over time.’
Millions of Americans could shave years off their mortgage term by adopting a simple yet effective strategy
Securing the right mortgage from the start matters
Both experts stress that saving money does not start with overpaying – it starts with choosing the right loan.
Bloch emphasized that the best mortgage is not always the one with the lowest advertised rate.
Miami-based mortgage broker Philip Bennett
‘The foundation of saving money over the life of a loan starts with securing the right financing from the beginning,’ he said. ‘Rate, cost structure and flexibility all matter.’
This includes understanding lender fees, the cost of discount points – upfront payments made to lower the interest rate – and how long you plan to stay in the home.
‘A 30-year mortgage often provides breathing room because a borrower can choose to pay extra toward principal but is not locked into a higher required payment the way they would be with a shorter term,’ Bloch said.
‘That flexibility can be invaluable when life circumstances change.’
Build consistent habits, not sporadic effort
When it comes to paying down a mortgage faster, both advisers stressed the importance of consistency rather than dramatic one-off payments.
Bennett suggested simple, systematic adjustments: rounding up your payment – for example, paying $2,400 instead of $2,275 – making one extra full payment per year, switching to biweekly payments or directing bonuses and tax refunds toward the loan balance.
Their recommended practices include committing to one extra principal payment per year, adding 5 to 10 percent more than the required monthly payment and reassessing annually as income increases.
‘This approach can often cut a 30-year mortgage down closer to 20 to 23 years without major lifestyle disruption,’ the adviser explained.
Bloch said that large lump sums can also be effective when timed well.
‘For homeowners who receive a large bonus, inheritance or proceeds from selling another property, making a significant principal payment can be especially powerful,’ he said.
Bloch also highlighted a lesser-known option called a mortgage recast where available.
A recast allows a homeowner to make a large lump-sum payment toward the balance. The lender then recalculates the monthly payment based on the new, lower amount owed – while keeping the same interest rate and remaining term.
The average long-term US mortgage rate fell at the beginning of 2026 to its lowest level in more than three years
What’s the saving?
While the exact benefit depends on the size of the loan and the interest rate, even modest overpayments can have a dramatic impact.
Consider a $500,000 mortgage at 6 percent over 30 years, which we also show in our graphic above.
At the standard payment of $2,998 per month, the total amount paid over three decades would reach $1,079,191 – including $579,191 in interest alone.
If that homeowner added $200 per month toward principal – increasing the payment to $3,198 – the loan would be paid off in roughly 25.5 years instead of 30.
Total payments would fall to $976,046, with total interest dropping to $476,046.
That is a saving of $103,145 in interest and roughly four and a half years of payments eliminated.
Making one extra full payment per year would produce a broadly similar result, cutting several years off the term and saving tens of thousands in interest.
The earlier overpayments begin, the greater the impact. Because mortgage interest is front-loaded, reducing the balance in the early years limits how much interest accrues over the life of the loan.
In effect, the homeowner earns a guaranteed return equal to their mortgage rate on every extra dollar paid toward principal – about 6 percent in this example – without taking market risk.
When early payoff may not be the right move
Despite the clear advantages, both experts cautioned that overpaying is not right for everyone.
Bennett warned that overpaying should not come at the expense of financial stability.
‘Homeowners should consider whether they have adequate emergency savings first, and whether they should prioritize higher-interest debt like credit cards,’ he said.
Bloch pointed out that borrowers with very low mortgage rates may find investing excess cash produces stronger long-term results.
‘If a homeowner has a rate above six percent, the case for early payoff becomes especially compelling because the savings are guaranteed – unlike stock market returns,’ he said. But with a lower rate, you may see a bigger payday with stock market investments.
Both advisers stressed the importance of liquidity – having instant access to cash – and avoiding becoming ‘house rich but cash poor.’
‘Tying up every extra dollar in home equity can create stress if an unexpected expense arises,’ Bloch said.
‘It’s also important to confirm that there are no prepayment penalties and to periodically evaluate whether refinancing could improve the overall strategy.’
As the experts explain, many borrowers don’t realize how much of their early mortgage payments go toward interest rather than paying down the balance
The payoff: more than math
The benefits of overpaying begin immediately with every extra dollar cutting future interest payments, but the long-term rewards extend beyond the math.
Paying off a mortgage five years early can mean entering retirement without a housing payment. It can create flexibility during career changes. It can reduce financial stress during downturns.
‘Paying off a mortgage early is not just about saving on interest,’ Bloch said. ‘It’s about building equity faster, lowering long-term risk and ultimately creating more control over your financial future.’
For many homeowners, becoming mortgage-free five to seven years earlier is a realistic goal simply by being consistent in their approach.
