How to Reduce the Principal Owed on Your Mortgage

Reducing mortgage principal allows you to save money on interest.

Reducing mortgage principal allows you to save money on interest.

Depending on the amount that you borrow, repaying your mortgage takes an average of 15 to 30 years. While you're making mortgage payments you also have to pay interest on the remaining loan amount every month. To save money on your mortgage you can pay extra toward the principal that's owed; reducing the principal will reduce the amount of interest that's charged and will also help you to pay off your mortgage ahead of schedule.

Discuss your options with the bank or other lender that issued your mortgage. Let them know that you want to reduce the principal on your loan and see what they recommend. The loan officer may be able to set you up on a bi-weekly payment plan or may adjust your monthly payment so that you pay a bit more which goes directly against the principal.

Make all of your mortgage payments on time, or early if possible. If you're mailing your payments in or paying with a check drawn from another bank, allow enough time for the payment to get there and clear so that you don't have late payment fees added to what you already owe.

Pay a little extra when possible to further reduce your principal. Make an extra payment after receiving your income tax returns or when you get a large bonus at work. Even if you can't make a full payment, any extra amount that you can pay will lower the remaining amount that you owe. If making your payments in person, ask whether the added amount can be credited against only the principal you owe; some lenders allow this type of crediting to encourage their patrons to pay back their loans faster.


  • Remember that your payments will stay the same even if you are paying extra against your principal. Overpaying one month doesn't mean that you can underpay the next.

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About the Author

Born in West Virginia, Jack Gerard now lives in Kentucky. A writer and editor with more than 10 years of experience, he has written both articles and poetry for publication in magazines and online. A former nationally ranked sport fencer, Gerard also spent several years as a fencing coach and trainer.

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