How to Pay Your Mortgage Off Early

There are a few ways to pay off your mortgage faster. Follow these tips for a quicker route to owning your property.


Paying your mortgage off early — if there’s an American Dream that’s more sought after  than buying your own house, it’s this one. Making that last mortgage payment means having more money in your budget, and that can mean being able to focus on other financial goals. Paying your mortgage off early can also save you thousands in interest, and of course, it’ll mean owning your own home free and clear.

But don’t you need a lot of extra money to pay off your mortgage early? Not necessarily. You may owe tens or even hundreds of thousands, but making just one extra payment a year can shave years off your loan term and thousands of your total loan costs. Here’s how to pay it down faster.

Pay Every Two Weeks Instead of Every Month

The simplest way to pay your mortgage off quicker, without straining your budget, is to pay half your normal payment every two weeks, instead of twice that amount monthly. You’ll be effectively paying biweekly instead of monthly, and it’ll have a similar effect on your budget, but you’ll end up making 13 loan payments each year instead of 12. That doesn’t seem like much, but you could pay your loan off as many as five years earlier and save thousands in interest.

Pay Extra on the Principal Every Month

Can’t afford to fit a whole extra payment into your budget every year? Pay whatever you can towards the principal of your mortgage each month, making sure to mark the overpayment as “principal only” on your payment ticket.

How much extra should you pay each month towards the principal of your loan? Well, that depends on how fast you want to pay it off. A few hundred extra a month could shorten the length of your mortgage by 10 years or more. Even $50 to $100 extra dollars a month will knock a few years off your loan and could save you thousands in interest. The exact savings will depend on your loan terms, but you can use a mortgage payoff calculator to plug in different amounts and get some numbers particular to your situation.

You don’t need to come up with $50 or $100 to make an impact, though. Whatever you can scrounge up by rounding your payment up a few dollars or bringing your own lunch to work a couple of times a week will go a long way towards shaving time off your mortgage. Paying as little as $20 extra towards your mortgage principal each month could help you pay off the loan as much as a year early.

Turn Your Windfalls into Equity

Everyone gets a little windfall of unexpected cash occasionally. Tax refunds, work bonuses, gifts from relatives, inheritances, even selling household items online can all generate unexpected funds. Use at least some of that money to make progress toward paying off your loan. 

If you get a raise, put some of the extra income towards paying off your mortgage early. Assuming you don’t need the money for daily expenses, you won’t miss it if you pay it towards the principle of your mortgage, since you’re not used to having it in your budget. Putting money from your raises toward retirement, emergency savings or paying off debt is a great way to stick to a budget and work toward your financial goals


Got a 30-year mortgage? With interest rates at historic lows, refinancing can net you a substantially lower interest rate, and it gives you the opportunity to shorten your loan term to a more manageable 15-year mortgage. 

However, refinancing means paying closing costs all over again, so if you’ve already got a good interest rate and a low payment on a 30-year fixed rate loan, it’ll be cheaper to just go ahead and double your payments, requesting that the extra be applied to your principal. You could pay off a 30-year loan in 15 years or less and save thousands in interest. 

Obviously, if you can use just one of these strategies, you can shorten the life of your loan. For maximum impact, though, use as many of these strategies as you can at once. It’s easy enough to, for example, pay a little extra each month and then dedicate a little of your tax refund to mortgage repayment in the same year. The more money you can put towards the principal of your mortgage, the faster you’ll pay off the loan, and the more you’ll save in interest. Paying off your mortgage early could mean saving tens of thousands of dollars in interest, so scrimping a little now could mean having much more later.

Paying off your mortgage early helps you build equity in your home faster, and so does making improvements that raise the value of your property. Get tips on home renovation, landscaping, maintenance and more delivered right to your inbox when you sign up for the Home Matters email newsletter. We’re committed to helping homeowners like you fit repairs and maintenance into their budgets, and making homeownership the rewarding experience it was meant to be.

AHS assumes no responsibility, and specifically disclaims all liability, for your use of any and all information contained herein.

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