Most mortgages are made for 30 years and during the first years you make payments that cover the interest, but do very little to reduce the actual amount that you owe. The table below shows some rough figures showing the amount of mortgage payments and what amount of those payments that is interest and principal. These calculations are based on a $200,000 mortgage at 7% per annum for 30 years.
| Year | Total Payments Made | Total Principal Paid | Total Interest Paid on Loan | Total Balance still due on Mortgage |
| 1 | $15,967 | $2,032 | $13,936 | $200,000 |
| 3 | $47,901 | $6,546 | $41,356 | $191,422 |
| 5 | $79,836 | $11,737 | $68,099 | $188,687 |
| 10 | $159,672 | $27,375 | $131,297 | $172,820 |
| 15 | $238,005 | $49,434 | $190,074 | $150,566 |
Notice that after 15 years or half of your loan's life, your payments of $238,005 on a loan of $200,000 have reduced the principal by less than $50,000 and you still would owe more than $150,000 in principle.
How can you pay less? Make extra payments as early and as often as you can. Making extra payments of $2,700 in the first year could reduce your total payments by over $15,000. Other ideas are to make the biggest downpament that you can or buying a less expensive house.
