June 18, 2024

Tips on How to Pay Off Your Mortgage Early

Paying off your mortgage early can provide financial freedom, save you a significant amount in interest, and offer peace of mind. Here are some practical tips to help you pay off your mortgage ahead of schedule.

Make Extra Payments

Monthly Extra Payment

One of the most straightforward ways to pay off your mortgage early is by making extra payments each month. Even a small additional amount can make a significant difference over time. For example, adding an extra $100 to your monthly payment can cut years off your mortgage term.

Bi-Weekly Payments

Instead of making one monthly payment, switch to bi-weekly payments. This method results in 26 payments per year, which equals 13 monthly payments, effectively making an extra payment each year. This can accelerate your mortgage payoff and reduce the total interest paid.

Lump-Sum Payments

Whenever you receive a windfall such as a bonus, tax refund, or inheritance, consider applying a portion or all of it to your mortgage principal. Lump-sum payments can drastically reduce your principal balance and shorten your loan term.

Refinance to a Shorter Term

Lower Interest Rates

Refinancing your mortgage to a shorter term, such as from a 30-year to a 15-year loan, can significantly reduce the time it takes to pay off your mortgage. Shorter-term loans often come with lower interest rates, which means more of your payment goes toward the principal.

Higher Monthly Payments

While your monthly payments may increase with a shorter-term loan, the overall interest savings and quicker payoff can be worth the higher payments. Ensure your budget can accommodate the increased payments before refinancing.

Round Up Your Payments

Simple Rounding

Rounding up your mortgage payment to the nearest hundred can make a substantial impact. For example, if your mortgage payment is $965, rounding up to $1,000 adds an extra $35 toward your principal each month.

Impact Over Time

Consistently rounding up your payments can reduce your loan term by several years and save you thousands in interest. It’s an easy strategy that requires minimal effort but delivers significant results.

Allocate Extra Income

Side Hustles

If you have additional income from a side hustle, part-time job, or freelance work, consider dedicating a portion of this income to your mortgage payments. This can accelerate your payoff without affecting your primary income.


Identify areas in your budget where you can cut expenses and redirect those savings to your mortgage. For example, reducing dining out, canceling unused subscriptions, or cutting back on non-essential purchases can free up extra funds for your mortgage.

Apply Raises and Bonuses

Annual Raises

When you receive an annual raise, consider allocating the extra income to your mortgage. Since you’re already accustomed to living on your previous salary, this additional money can go directly toward paying down your loan.

Bonuses and Gifts

Similarly, use bonuses, tax refunds, and monetary gifts to make additional mortgage payments. These lump-sum payments can make a significant dent in your principal balance.

Recast Your Mortgage

Lower Monthly Payments

If you have made substantial payments toward your mortgage principal, you can request a mortgage recast. This process recalculates your monthly payments based on the new, lower principal balance, potentially lowering your payments and freeing up funds to make additional payments.

Minimal Fees

Mortgage recasting typically involves minimal fees compared to refinancing and doesn’t change your loan terms or interest rate. It’s a cost-effective way to adjust your payment plan and pay off your mortgage faster.

Use Found Money

Unexpected Funds

Found money refers to unexpected funds such as refunds, class action settlements, or rebates. Instead of spending these small windfalls, apply them to your mortgage. Every little bit helps in reducing your principal balance.

Regular Application

Regularly applying found money to your mortgage can steadily decrease your balance and shorten your loan term without significantly impacting your monthly budget.

Pay Extra on Principal

Principal-Only Payments

Specify that your extra payments are to be applied to the principal balance rather than future payments. This ensures that your additional funds reduce your principal directly, decreasing the amount of interest you’ll pay over time.

Online Payments

Many lenders allow you to make principal-only payments online. Take advantage of this feature to make extra payments conveniently and efficiently.

Consider a Home Equity Line of Credit (HELOC)

Lower Interest Rates

Using a HELOC to pay off a portion of your mortgage can be beneficial if the HELOC has a significantly lower interest rate than your mortgage. You can then make aggressive payments toward the HELOC, potentially saving on interest and paying off your mortgage faster.

Flexible Repayment

A HELOC offers flexible repayment options, allowing you to manage your finances more effectively and focus on paying down your mortgage principal.

Avoid Lifestyle Inflation

Maintain Your Lifestyle

When your income increases, resist the temptation to upgrade your lifestyle immediately. By maintaining your current lifestyle and directing additional income toward your mortgage, you can pay off your loan more quickly.

Focus on Long-Term Goals

Keeping your long-term financial goals in mind can help you stay disciplined. Remember, the temporary sacrifice of not inflating your lifestyle will result in long-term benefits like mortgage freedom and financial security.


Paying off your mortgage early requires discipline, strategic planning, and a commitment to making extra payments whenever possible. By following these tips, you can significantly reduce your mortgage term, save thousands in interest, and achieve financial freedom sooner.

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