Strategies to Pay Off Your Mortgage Early

Extra mortgage payments can save you thousands in interest.

Making monthly mortgage payments can sometimes feel like something you’ll be doing for the rest of your life — but it doesn’t have to be.

Paying off a 30-year fixed-rate mortgage early can save you a bundle in interest charges. For example, if you have a $300,000 mortgage with an interest rate of 5.5 percent, you can cut five years off your loan term and save around $60,000 in interest if you pay one extra payment a year, according to the publication SFGate.

Here are 10 strategic planning and creative cost-saving measures that might require a sacrifice or two, but will help you pay off your mortgage early

Should You Pay Off Your Mortgage Early?

Before you implement any of the following strategies, make sure that paying off your mortgage early is the best financial decision for you. First, check with your mortgage company to make sure that they accept extra payments without penalties. If they do, make sure you specify that any extra payments are meant to go toward your principal balance, rather than to the next month’s payment.

Save for Your Future

If your mortgage company allows you to pay off your mortgage loan early and you have the financial means to do so, follow the below tips. There’s no need to pay for a mortgage accelerator program — all of these strategies are things you can easily do yourself.

1. Rent Out Space in Your Home

Thanks to the new sharing economy, it’s easier than ever to make money from the unused space in your home. You can rent rooms or your entire house to students or vacationers through sites like Airbnb or opt for long-term tenants while you live somewhere less expensive.

Sharing your space with strangers might sound uncomfortable, but you’ll never know until you try it. Plus, hosting students and Airbnb guests can be a relatively short-term commitment. You don’t have to keep doing it if you decide it’s not worth the savings you’d get from paying off your mortgage early.

2. Accelerate Your Mortgage Payments

Accelerating your mortgage payments might be the easiest way to pay off a mortgage loan early. If you make one extra mortgage payment each quarter you’ll save more than $65,000 in interest and pay off your mortgage early by 11 years, given a $220,000, 30-year mortgage loan with a 4 percent interest rate, according to the Dave Ramsey website.

Save for Your Future

Related: How to Save Big Using Dave Ramsey’s Envelope System

3. Make Biweekly Payments

The biweekly payments system is meant to shorten your loan’s amortization schedule. So instead of making 12 full payments a year, you make a half-sized payment every two weeks, which adds up to 13 payments a year, according to the publication The Mortgage Reports. With that extra mortgage payment, the principal balance of the loan gets reduced, which shortens the payoff period.

Some banks can set up this payoff plan for you, but you should probably do it on your own. That way, you won’t be locked into a biweekly payment contract with the bank if you change your mind.

4. Refinance Your Mortgage

Simply put, refinancing your mortgage is getting a new loan to replace the original. Refinancing your mortgage loan can help you in a couple different ways:

  • You can shorten the loan and commit to higher payments to pay off your debt sooner.
  • You can take advantage of better mortgage rates.

Refinancing could allow you to pay off your mortgage early and cut your interest costs, according to U.S. News. It might also eliminate private mortgage insurance, and those funds could then be used to pay off your mortgage principal, which will speed up the process even more. 

Save for Your Future

Understand: 15 Mortgage Questions to Ask Your Lender

5. Set a Payoff Date

Use an online mortgage payoff calculator to set a payoff goal that is challenging but attainable. The calculator will show you how much progress you can make toward paying off your loan by a certain date. Once you set your goal, you’ll be more likely to stick to your plan.

6. Increase Your Earnings

Take extra shifts at work, wait tables on the weekends, pick up holiday or seasonal work, freelance, consult, pet sit or do odd jobs. As you earn additional income from your side hustle, put it toward your mortgage loan balance.

7. Become Super Frugal

Start eliminating all unnecessary expenses: Cut cable, get cheaper insurance and stop eating out or buying new clothes. It might sound extreme, but it works if you use the money you save to pay off your mortgage early.

Related: 31 Easy Ways to Save Money

8. Make a Lump-Sum Payment

If you receive an inheritance, tax refund or bonus, apply it to the principal balance of your mortgage loan. The interest savings could be better than any potential investment.

Save for Your Future

9. Round Up Your Payment

Rounding up your mortgage payment, even by just a few dollars, can help you pay off the loan early, according to Nationwide. You can also use an app like Qapital to round up all your purchases and set aside the spare change for an additional payment. It adds up quickly.

10. Downsize

If you really want to get rid of your existing mortgage, one way to do so is to sell your current home and use the profits to buy a less expensive one. You might be able to buy a new house from the profits of the sale alone, but if not, at least you will have a smaller mortgage that you will be able to pay back more quickly.

Click to see why this blogger is no rush to pay off his mortgage.

More on Mortgages

Barri Segal and Gabrielle Olya contributed to the reporting for this article.

About the Author

Morgan Quinn

Morgan Quinn is an experienced personal finance writer and her work has appeared on, Huffington Post and Slate. She is also the former Managing Editor of

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