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Last updated Jan. 24, 2023 by Peter Jakes

There are many advantages to paying off your mortgage early, which is why many folks have done so already. For one, it releases the psychological pressure of debt and helps in slashing interest payments.

In addition to paying off your debt early, it’s excellent for increasing cash flow- especially for retirees.

Whatever your motivation, settling your mortgage beforehand helps minimize the interest you’d pay for the loan. Moreover, it can save you tons of cash which you can use to sort out other expenses. Here are 12 simple ways to pay off your mortgage debt early.

A building with Mortgage prints.12 simple ways to pay mortgage early
What is next after the mortgage payoff? ( Mortgage 101 )

1. Leverage Mortage Recasting

Mortgage recasting might sound strange to you, but it is one of the simple ways to pay off your mortgage early. To recast a mortgage means you’ll have to make one lump-sum payment to your principal balance.

Generally, a minimum of $5,000 is required to recast. The lender will then amortizes the loan to corollate with the new balance.

Recasting a loan helps solve a few things. For one, your monthly payment will reduce drastically. Additionally, you’ll save money on interest throughout the loan.

And if you implement those savings toward larger monthly payments, it’ll help you to pay off the mortgage early.

However, there’s a fee required for recasting a loan, though it’s typically just a few hundred dollars. Also, note that not all loan types, such as the U.S Department of Veterans Affairs (VA) mortgages and Federal Housing Administration (FHA)., can be recast.

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2. Make Payment Biweekly

One of the practical ways to pay off your mortgage early that doesn’t involve making any extra payments is to halve your monthly payment into two smaller payments and make payments every two weeks.

Most mortgages usually ask for a monthly payment or 12 payments yearly. However, if you agree to switch to bimonthly payments, you’ll pay 26 times per year—in effect, an extra payment.

Doing this will not only quicken the rate of your loan payoff but also save you money on interest throughout the loan.

For example, on a $250,000 30-year fixed-rate mortgage placed at 3.5%, it’ll help pay off your mortgage four years early and, at the same time, save more than $20,000 in interest.

Such an idea effectively pays off your mortgage early and saves money on interest.

However, not all lenders permit biweekly payments, though many do. Therefore, if you want to switch to this effective payment method, contact your lender and ensure to double-check that they don’t charge an extra fee to do so.

You could also reach and sign a new agreement with your lender for a biweekly payment if it weren’t contained in the contract.

3. Apply for a Loan Modification

A loan modification is a deal where the lender adjusts the loan term or interest rate to help get the loan current. If you can’t afford your mortgage payment, but you desire to get back on track, a home loan modification is what you need.

Using the loan modification, you can pay off the loan faster and save on interest. However, there could be repercussions for your credit, depending on how the lender or service reports to the credit agencies – so it’s best to have an upfront discussion with your lender before applying for a loan modification.

4. Rent Out Space in Your Apartment

If you aim to pay off your mortgage loan faster, consider renting unused space in your home. Thanks to today’s sharing economy, it’s become easier to make extra cash from unused space in your apartment.

You can rent rooms or even your house to vacationers or students through platforms like Airbnb or, better still, go for long-term tenants while you relocate to somewhere less expensive.

Related Article: 19 Bad Spending Habits to Avoid if You Want to Build wealth

Using this idea, you can quickly save tens of thousands to pay off your mortgage earlier than usual. Sharing your home with strangers might sound uncomfortable, but you may get used to it before you know it! Plus, hosting Airbnb guests or students is, after all, for the short term.

You don’t have to continue if you feel it’s not worth the benefits you’d get from paying off your mortgage early.

5. Downsize Your Apartment

If you want to pay off your mortgage early existing mortgage, consider selling your current home. You can use the profit incurred to buy a less expensive home.

Even if you cannot buy a new house from the profits, you’ll have a smaller mortgage which you can easily pay back more quickly.

Of course, you’ll need to crunch the numbers to ensure that selling your current home is worth it and is a smart move.

However, several expenses could minimize your profits and cause you to have a larger mortgage balance than you might have imagined, including real estate agent commissions, closing costs, and other moving expenses.

But even if you may have to get a small mortgage, there’re chances that you’ve succeeded in reducing your debt. Now you aim to eliminate your debt as soon as possible. Therefore, the smaller the balance, the faster you can make it happen.

6. Use a Lump-sum Payment to Reduce your Balance 

If recasting does not work, a lump-sum payment to your principal is a great alternative. For example, have you sold another property, earned large bonuses or commission checks, or inherited money? You could apply your proceeds to your mortgage’s principal balance and become debt-free much sooner.

Since FHA and VA loans cannot be recast, lump-sum payment is the next best thing. In addition, you’ll save yourself extra cash from bank fees for recasting.

However, some mortgage servicers would request a specification on when extra income will be placed toward the principal. Otherwise, the extra cash could be split between the principal and the interest as it is divided with the regular monthly mortgage payment.

7. Leverage Found Money

If you don’t have provisions in your household budget to make a lump-sum payment or increase your payment, consider leveraging ‘found’ money instead.

Found money is income from a bonus at work, an inheritance, or birthday money, for example. Since it’s ‘found’ money, you weren’t expecting it; hence it won’t affect your budget.

While you could easily get tempted to spend your ‘found’ money on other exciting things, such as partying, why not consider that about half the total interest of an average mortgage accumulates in the first ten years (because the principal is much higher)?

So, the quicker you can reduce your loan, the less interest you’ll have to pay, and the sooner you’ll pay off your mortgage.

8. Make Extra Payments

Making extra payments is an incredible way to pay off your mortgage early. There are two ways to do this; either biweekly payment or additional payment monthly. In the first approach, you’ll have to divide your monthly mortgage payment in half and make it biweekly.

In doing this, you’ll make the equivalent of thirteen months of mortgage payments in a year instead of the usual twelve and save money on interest.

A biweekly mortgage payment is an easy tactic for most homeowners because it’s hardly noticeable in the monthly budget. However, you’ll have to consult with your servicer or lender to confirm whether they accept biweekly payments.

The second tactic is to pay extra against the principal monthly or make an extra principal-only payment yearly. It also will save you tens of thousands of dollars throughout the loan.

For instance, say your 25-year mortgage is for $200,000, and your rate is 4 percent. Therefore, if you make an additional $100 monthly payment to the principal balance of your loan, you’ll pay it off in four years.

Making extra monthly payments can be better than refinancing, as it doesn’t press you into a payment. You wouldn’t be penalized even if you didn’t add more to your monthly mortgage payment.

However, in using this tactic, check with your lender that your charges will be applied correctly to reduce the principal and not prepay the interest. In addition, ensure the lender is aware that the extra payment isn’t for the next month’s mortgage payment.

9. Use Extra Money for Extra Mortgage Payment

If you aim to pay off your mortgage early, use every means possible, including any extra money you have. Use any extra money you come across to make an extra mortgage payment instead of spending it on less important things.

Every extra money you get, like a tax refund, payday loans, or unexpected windfalls, can be used for your mortgage payoff. An additional mortgage payment, whether quarterly, biweekly, monthly or as you get extra cash, expedites your mortgage balance payoff date.

Also, ensure that you let your lender know that the extra funds are to be put directly to the mortgage principal; this is especially real early on in your mortgage, during the bulk of your payment is directly going toward the interest.

10. Make Mortage Repayments More Often

If your loan repayment amount is calculated monthly, you make essential additional savings by halving the monthly repayments and paying biweekly instead. This method will help you pay an extra month’s worth off your loan annually, reducing the principal faster.

It’s best to use a loan repayment calculator to know the difference in loan repayment amounts so that everything will go smoothly.

Furthermore, check the fine print on your loan documents to ensure that your lender hasn’t calculated your biweekly payments to equal half of what the monthly repayments would’ve been, as this will save you time and money.

Also, use the extra repayments calculator to indicate the amount you could save using different repayment amounts.

11. Get an Extra Source of Income Generation

You may need to generate extra money to make extra mortgage payments, and taking a side hustle can help you with this plan.

After your regular nine-to-five, consider adding another job to make extra cash dedicated to paying your mortgage. However, the best way to succeed using this idea is by doing an additional job that isn’t stressful.

To do this, pick a skill you already have, such as writing, babysitting, tutoring, or editing. Then, pick whatever it is that you love and side hustles it.

However, know that you wouldn’t make a massive amount of money through your side hustle that’ll significantly impact your mortgage payments.

Notwithstanding, it’s best to do little to pay off your mortgage early. For example, if you earn $100 from your side hustle, adding it to your mortgage will help you pay over $25,000 less interest.

In addition, you’d reach your loan validity date an impressive 70 months earlier than if you choose the monthly mortgage payment.

12. Increase the Amount You Pay With Time

Increasing the amount to pay off your mortgage early is also a great idea. You can improve the loan you pay monthly, and with time you’ll significantly improve even without noticing.

However, using this approach requires you to make a serious commitment. It’ll help if you put a reminder on your calendar to improve your mortgage payment on the first of every month annually. Then, choose to improve your mortgage payment using a predetermined amount.

And by the end of each year, you’ll have added $250 to your annual mortgage payment. Similarly, by slowly increasing the amount you pay, the difference wouldn’t be noticeable. With so doing, you’ll pay off your mortgage earlier than the expected date.

Frequently Asked Questions

How Do I Pay Off My 30-year Mortgage in 10 Years?

You can consider buying a much smaller home as an excellent way to pay off your mortgage in 10 years – a smaller mortgage is relatively more manageable and, in addition, will cost less in interest. Another way is to make a significant down payment.

The bigger your down payment, the smaller your loan, and the faster you can get out of debt. As you pay your mortgage, try to increase your monthly payment to help you reach your goal in time.

How Can I Pay Off a 30-year Mortgage in 9 Years?

One of the best ways to pay off a 30-year mortgage in 9 Years is by generating an extra source of income. With your extra income, you can use it to pay off a considerable amount. In addition, consider refinancing your mortgage to pay attention to it and pay it off faster.

However, the caveat of refinancing your 30-year mortgage to a 9-year one is that you’ll have higher payments that you can’t take a break from. For example, if you experience a job loss or have another financial emergency,  you may find it hard to afford the higher payments on a 9-year mortgage.

What Will Happen if I Make 1 Extra Mortgage Payment a Year?

Making an extra mortgage payment every year could significantly reduce the term of your loan. The most budget-friendly way to achieve this is to pay 1/12 extra per month.

For example, by paying $975 monthly on a $900 mortgage, you will have paid the equivalent of one extra payment by the end of the year.

What Will Happen if I Pay an Extra 1000 a Month on my Mortgage?

Paying an extra $1000 a month on your mortgage isn’t a guarantee that you’ll pay off your mortgage more quickly.

Unless you explain to your lender that the additional money is meant to be applied to your principal balance. Otherwise, the lender may use it as pay down for interest for the subsequent scheduled payment.

Is it Better to pay Lump Sum off Mortgage or Extra Monthly?

Paying a lump sum off the mortgage is generally better than paying extra monthly. Making a lump-sum payment will save you money on interest. And depending on how you do it, the payment will either reduce the amount you pay monthly or shorten the duration it takes to pay off your mortgage.

How Can I Pay my House Off in 5 Years?

Putting down a large down payment would go a long way in helping you to pay off your mortgage in five years. In addition, offering a 20 percent down payment can help you avoid PMI (Private Mortgage Insurance).

So if you put down 20% and avoid PMI altogether, it’ll result in lots of savings. You could also use that PMI amount to make your mortgage payment even faster.

How Can I Pay My 20-Year Mortgage in 10 Years?

Making biweekly payments will go a long way in paying your twenty-year mortgage in ten years. Making a biweekly mortgage payment means you’ll have to make a payment equivalent to half the fully amortizing monthly payment every two weeks.

Doing this will not only quicken the rate of your loan payoff but also save you money on interest throughout the loan.

How Can I Pay a 15-Year Mortgage in 7 Years?

Consider recasting your mortgage to pay it off early. By recasting, you’ll make a large lump-sum payment to your principal balance, and the lender will amortize the loan to reflect the new balance.

Doing this will also save you money on interest over the life of your loan. And by applying the savings to your larger monthly payments, you’ll also be able to pay off the mortgage early.

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