Own a home? Chances are, you have years of mortgage payments ahead of you. However, with a little financial savvy and planning, those mortgage payments don’t have to stretch out forever.

It’s no pipe dream. You can really pay off your mortgage faster without making huge sacrifices. According to Ron Goforth, PNC’s Product Development Manager for Mortgage, all it takes is being thoughtful about how you structure mortgage payments. 

“Paying off a mortgage at a faster rate than your mortgage terms will prove a big step toward building a secure financial future. Once your mortgage is paid, you gain the freedom to divert that money into wealth building. What’s more, the faster you pay off your mortgage, the sooner you build equity in your home. And equity is a powerful financial tool all its own.” 

Sounds good, right? But it’s important to understand how your monthly mortgage payment is applied. 

Principal Vs. Interest: Why It Matters

The first thing to know about your mortgage? The bulk of your first few years of payments don’t go towards the principal—the actual amount of money that you’ve borrowed—but to the interest on the loan. Any extra payments could potentially chip away at the principal faster. And the more you reduce the principal on your loan, the sooner your mortgage will be paid off. 

Mortgage Loans: Find the Right Home Mortgage Loan | PNC

Three Great Ways To Become Free and Clear

Ready to chart your path? Here are the three most common tactics. With solid planning, none of these efforts should overextend your monthly budget. Once you have a full picture of your monthly finances, talk to your mortgage lender about these options. Chances are, you’ll discover an option that proves the right move for you. 

1) 30-year mortgage? Try a 15- or 20-year note instead. The shorter your mortgage term, the less interest you’ll pay. According to Goforth, there are other benefits, too. “When you refinance a 30-year mortgage into a 15-year note, you don’t just pay the mortgage off faster, you usually have a lower interest rate, too.”1

With this in mind, it’s always a good idea to explore how a shorter-term mortgage can yield potential savings. Your mortgage professional can walk you through scenarios based on current interest rates and your specific mortgage amount.   

Mortgage Refinance Calculator: Should You Refinance? (pnc.com)

2) Pay every two weeks, rather than monthly. According to Goforth, “It’s a simple trick. Pay every two weeks, with each of those biweekly payments representing half the monthly amount. That means you’ll make 26 half-payments – a total of 13 whole payments – versus 12 payments over the course of the year. That’s one full extra payment a year, which allows you to pay off your 30-year mortgage several years earlier.” Not only that, but you also pay a good deal less in interest over the life of the loan. 2

3) Make additional lump-sum payments. You might experience a windfall such as an inheritance or a sizable bonus. If so, “A significant payment toward your principal could put a dent in what you owe. Not only that,” adds Goforth, “but, depending on the terms of your mortgage, what remains of your debt could be recalculated, giving you a much lower monthly payment.”  

However, Goforth advises, not all mortgage terms are the same. It’s crucial that you check with your mortgage lender to see if a lump-sum payment is allowable under your current agreement. 

“Some mortgages do not allow a lump-sum payment, outside of the normal payment cadence. Others require lump-sum payments to exceed a minimum amount. In addition, recalculating a mortgage after a lump-sum payment typically will require minor administrative fees. That makes it important to check with your lender before making this move.”

First Time Home Buyers Guide: Tools, Calculators & Resources | PNC

If you’d like to become debt free much sooner—and who wouldn’t? —then now is a great time to explore your options. Perform your homework with the help of a mortgage loan professional, and you could enjoy a debt-free future in the not-so-distant future.