How to Save Thousands of Dollars in Interest and Pay Your Mortgage off Faster
Becoming mortgage-free doesn’t have to take decades. With a few smart strategies, you can make extra principal payments, save thousands in interest, and pay off your home years ahead of schedule. Here are three powerful ways to do it:
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1. Round Up Your Monthly Payment
A small change can make a huge difference. By rounding up your monthly mortgage payment, you chip away at the principal faster and reduce interest costs.
💡 Example:
If your monthly payment is $734, round it up to $800.
- Interest Savings: Over $48,000
- Time Saved: About 7.5 years off your mortgage
Use Your Tax Refund for a One-Time Prepayment
Instead of spending your tax refund, put it toward your mortgage balance. Even small, one-time payments add up over the years.
💡 Example:
On a $100,000 mortgage, applying a $1,000 tax refund can:
- Save: More than $8,600 in interest
- Time Saved: 1 year and 1 month off your mortgage
Consider a 15-Year Mortgage Instead of 30
If your budget allows, choosing a shorter loan term is one of the most effective ways to save big on interest.
💡 Example:
For a $100,000 mortgage at 8% interest:
- A 30-year loan costs nearly double in interest
- A 15-year loan means slightly higher monthly payments (around $200 more)
- Total Savings: Over $92,000 in interest over the life of the loan
information is deemed reliable but not guaranteed. Sourced in part from the Toronto Regional Real Estate Board (TRREB). Provided solely for consumers with a bona fide interest in the purchase, sale, or lease of real estate. Unauthorized use, reproduction, or distribution is strictly prohibited.