What is mortgage curtailment? Benefits and considerations

Mortgage curtailment means making extra payments on a mortgage loan. These extra payments can reduce long-term interest costs and save money.

One or two extra payments over a 30-year mortgage won't save much, but making extra payments regularly can shave years off and save thousands of dollars in interest.

Curtailment is powerful because it targets the loan's principal balance.

What is curtailment on a mortgage, and how does it work?

Fixed-rate mortgages come with a pre-set schedule. A 30-year loan, for example, requires 360 monthly payments that repay all of the loan's principal and interest.

Mortgage curtailment lets borrowers jump ahead in this schedule and also saves money by giving the loan servicer less time to charge interest.

Plus, extra payments reduce debt faster than regular payments.

Why extra payments save more money

Regular payments include principal, interest, and escrow. Early in the loan, most of the payment goes toward interest. Extra payments, however, can be applied entirely to principal, reducing the balance faster.

Check with your servicer before making extra payments to ensure they go to principal, not future scheduled payments.

Mortgage curtailment example

Consider a 30-year, $200,000 mortgage at 4%. Following the normal schedule, you’d pay about $143,739 in interest. By adding just $100 monthly toward principal, you could shorten the loan term by ~4.5 years and save nearly $26,852 in interest.

On a $350,000 loan at 5%, that same $100 extra per month would save over $40,000 in interest payments.

Even modest curtailment efforts can save a lot of money. Learn more about paying off your mortgage faster.

Types of curtailment

Partial curtailment

Partial curtailment means making extra payments toward principal without paying off the loan entirely. These can be monthly, occasional, or lump-sum. The monthly payment stays the same, but the loan amortization schedule shortens.

Example: A 30-year, $300,000 mortgage at 6.5% with $1,896 monthly payments. Adding $200 monthly could cut six years off the loan and save over $80,000 in interest. Even $50 extra each month saves thousands over time.

Full curtailment

Full curtailment means paying off the remaining mortgage balance all at once. This eliminates all future interest, but requires significant cash. Often done after receiving inheritance, bonuses, or property sale proceeds.

Check for prepayment penalties. Most modern mortgages don’t have them.

Benefits of mortgage curtailment

• Interest savings: Even modest extra payments cut thousands from loan costs.
• Shortened term: Finish your loan in 22–25 years instead of 30.
• Faster equity: Extra payments increase homeownership share faster, useful for HELOCs or loans.
• Reduced stress: Peace of mind from faster debt reduction.
• No extra costs: Unlike refinancing, no closing costs.
• No commitment: Skip extra payments when cash is tight.

But curtailment is not for everyone. Build an emergency fund first, and consider paying off higher-interest debts before paying extra on your mortgage.

How to do a mortgage curtailment

Contact your mortgage servicer to confirm how to apply extra payments. Some servicers let you designate “apply to principal” online; others require phone or mail instructions.

Remember: Curtailment is in addition to your normal monthly payment — not a replacement.

Mortgage curtailment considerations

Financial stability first

Even if you pay thousands early, your next monthly payment is still due in full. Don’t overextend.

Opportunity costs

Money used for curtailment can’t be invested elsewhere. If your mortgage rate is 5% but investments return 8%, curtailment may not be optimal.

Tax implications

Paying less mortgage interest may reduce your tax deductions. For standard deduction filers, this usually doesn’t matter.

Mortgage curtailment alternatives

Refinancing

Refinancing can reduce your rate or term, cutting interest without extra payments.

Mortgage recasting

Recasting lets you make a lump-sum principal payment, then re-amortize your loan at the same rate and term with lower monthly payments.

Eliminating mortgage insurance

If you have less than 20% equity, focus on eliminating PMI first. Once your balance is 80% of home value, PMI drops off, saving hundreds monthly. FHA loans require refinancing to remove mortgage insurance.

Mortgage curtailment FAQs

What's the difference between curtailment and prepayment?

Curtailment specifically targets principal. Prepayment could cover future payments or other loan components. All curtailments are prepayments, but not all prepayments are curtailments.

How much money could I save?

Savings depend on loan size, rate, and frequency of extra payments. Example: $350k at 5% with $100 extra monthly saves ~$40k. Use a calculator for your case.

What does “posted to curtailment” mean?

It means your servicer applied your extra payment to principal, reducing the balance beyond the regular schedule.

Mortgage curtailment is a personal choice

Curtailment speeds up payoff, saves interest, and builds equity faster. But it depends on your financial stability, goals, and opportunity costs. There’s no one-size-fits-all answer.