Making extra principal payments on your mortgage does save on interest. But the real benefit depends on when you do it and the conditions of your loan.
On variable-rate loans, paying early before the annual rate review can reduce the principal on which new interest is calculated, potentially lowering your monthly payments. On fixed-rate loans like those from Flat.mx, the benefit is more straightforward: you shorten the total loan term.
Less total interest. By reducing outstanding principal, you also reduce the interest generated on that balance.
Shorter loan term. You can finish paying your loan in less time.
Higher net worth. Less debt means greater real equity in your property.
Better credit history. Demonstrates repayment capacity, which can facilitate future financing at better rates.
Prepayment fees. Some lenders charge a fee for early payments. Verify your loan conditions.
Liquidity. Using all your savings to amortize can leave you without an emergency fund. Always keep a reserve.
Opportunity cost. If your interest rate is low, investing that money elsewhere might yield better returns than paying off the mortgage early.
Have questions about your mortgage conditions?
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