Prepayment of your mortgage loan has two purposes:

1. shortening the term; and,

2. allowing you to pay less interest.

The way prepayment was traditionally made was by paying the exact amount of principal for your next payment along with your current payment. If you had 300 payments left on your loan, your current payment would bring you down to 299. If you paid payment 300 plus the principal reduction amount on payment 299 at the same time, you would then have 298 payments remaining.

This was an easy way to figure out how much to pay and how many months you would have to pay to pay off the loan. The greatest advantage in prepaying your loan was during the early years of your loan. This was when the amount going to principal was lowest and the interest amount was highest. If your payment was $1,000 per month early in your loan, perhaps only $100 was going to principal and $900 to interest on your current payment. Your next payment might have $110 going to principal. By prepaying the $110, you saved $890 in interest.

Late in your loan the opposite would be true, $900 would go to principal and $100 to interest. You would have to make a very large additional principal payment to save a small amount of interest. It simply is not a good option.