The amount of money you originally borrowed, excluding interest.
Each mortgage payment consists of a principal portion and an interest portion. Early in your amortization, most of each payment goes toward interest. Over time, the principal portion grows and the interest portion shrinks. Making extra principal payments (lump sums or increased regular payments) can significantly reduce your total interest cost and shorten your amortization. Most mortgages allow 10-20% annual prepayment privileges.
Related terms: Amortization | Interest Rate | Prepayment Penalty