7 Simple Ways to Pay Off Your Mortgage Early

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Have you ever thought about paying the mortgage on your house off early? How flexible would your finances be if you had no mortgage payment monies going out the door every month?

Would you like to be debt-free and not have to worry about living paycheck to paycheck?

How to Pay Off Your Mortgage Early

Maybe you’re skeptical and don’t think it is that big of a deal to pay your mortgage off faster. Let’s start with an example so I can show you from a financial standpoint how much money you can save by paying your mortgage off early.

For instance, let’s say you buy a house and get a 30-year mortgage for $200,000 at 4.0%. If you kept the loan to the end of the term, you would have paid $143,739 in interest.

This means the total amount you paid for the house would be $343,739.

On the other hand, if you bought the same house and got a 15-year mortgage instead at 3.5%, you would pay only $57,357 in interest. Bringing your new total to $257,357.

This is a difference of $86,382!

I don’t know about you, but I am interested in saving that kind of money.

If saving that kind of money appeals to you, read on for seven action items you can take in order to pay off your mortgage early.

1. Create a Financial Gameplan

create a budget to pay off mortgage early

A Financial Gameplan is a plan to help you manage your money in a way that’s in line with your life goals.

To summarize the Financial Gameplan, you want to take these steps:

  • Make a list outlining your financial goals and what’s important to you
  • Create a monthly budget listing all of your expenses
  • Consider a Challenge Everything Budget, where you eliminate unimportant or unnecessary expenses
  • Stick to your budget so you are spending in line with your goals

If you find after creating your gameplan that you need more income, choose some side hustles to bring that income in

Take all the extra money you have after creating your gameplan, and apply it toward principal payments on your mortgage.

2. Reduce Your Mortgage Payoff Time

While you could refinance your mortgage to a lower term, that often involves paying closing costs. Instead, you could pay your mortgage off early by reducing your term on your own.

For example, let’s say you’ve got 25 years left on your 30-year mortgage. The first step would be for you to go to a site like Bankrate.com and use their mortgage calculator.

Then type in your mortgage balance and the current interest rate you’re paying. For the term, put the number of years you’ve got left on your mortgage.

Next, change that term to 15 years (or whatever number of years you want to be mortgage free in). This will let you know what size payments you need to make to pay the mortgage off in 15 years.

Take the difference in your current payment and the newly calculated payment, and make that amount as an additional principal payment each month.

It’s important that you specify at the bank that the payment should be made as an additional principal payment. If you don’t, the bank may apply the extra payments toward future monthly payments.

If they do that, it will negatively affect the interest savings you could earn by paying off the mortgage early.

By taking these steps, you lower the term on your mortgage yourself with additional principal payments. Thus, you save yourself the hassle – and the money – that refinancing can cost you.

3. Refinance to a Lower Rate

Above, we talked about figuring out how to pay your mortgage off early on your own. However, in some cases, it is better if you refinance to a lower rate.

To explain, let’s say you currently have a 30-year mortgage at an interest rate above 5%. But the current average national rate is 3.50% on a 15-year mortgage (as of May of 2019). Under those circumstances, you should consider refinancing to a 15-year fixed.

Refinancing could save you a few thousand dollars a year in interest just by making this move. Here’s an example:

For simplicity’s sake, let’s look at an instance where you’re only refinancing to reduce your interest rate. You’ve only got 15 years left on your mortgage, with a balance of $200,000. If you pay the mortgage off on time, you’ll pay $94,150 in interest.

In contrast, if you refinance to another 15-year mortgage at a rate of 3.5% (current average national rate as of May 2019), you’ll only pay $57,357 in interest.

That’s $36,793 in savings – well worth the cost of refinancing. And if you make additional principal payments to get it paid down earlier, you’ll save even more.

Compare today’s interest rates with your current rate using a mortgage calculator. You may just find refinancing well worth your time and money.

4. Make One Extra Payment Per Year

Another easy way to pay your mortgage off early is to make one extra principal payment per year that equals your monthly payment.

If you do this for the entirety of the mortgage loan using the $200,000, 30-year loan example above, you’ll pay off your loan three years and ten months early. And you’ll save over $20,000 in interest.

5. Use Unexpected Money

Another way get that mortgage gone faster is to commit to putting all extra or “unexpected” money toward principal payments on your mortgage.

For instance, you know that tax return you get every year? Instead of using it to treat yourself to a vacation or new electronic gadget, put it as a principal payment on your mortgage.

Some other examples of unexpected money you could use include:

  • Work bonuses
  • Annual raises
  • Cash birthday and other gifts
  • The money you get from returning items you bought
  • Inheritance money
  • Overtime pay at work
  • Coins and small bills you get when you pay cash for things

Whatever the form of unexpected money, just sock it away as soon as you get it. Commit that you won’t spend it, but instead will use it to put toward mortgage payoff.

6. Rent Out Space in Your Home

Do you have an extra bedroom in your house? Why not use it to make some cash and get that mortgage paid off?

My friends Steve and Annette make an average of $1,500 every month by renting out bedrooms on Airbnb. People like to use Airbnb instead of hotels when they travel.

Staying in a home is often cheaper than it is to stay at a hotel, and it’s a cozier place for travelers to stay. Some travelers like the feeling of “home” that comes with staying at someone’s house.

If you could make a few hundred extra dollars a month on Airbnb, you could pay off your mortgage much faster.

Related Article: The Ultimate Airbnb Checklist: 14 Ways to Get More Bookings

7. Get a Side Hustle

One surefire way to find some extra cash is to start a side hustle or two. A side hustle is simply a short or long-term gig to help you earn more money.

There are dozens of side hustles you can use to make money, but here are a few examples:

  • Be a rideshare driver with Uber or Lyft
  • Work as a virtual assistant
  • Pick up a job as a server at a restaurant
  • Mow lawns
  • Work as a caregiver for kids, animals or the elderly by advertising your services on Care.com
  • Get paid to do small handyperson jobs near you through TaskRabbit
  • Find gigs on Craigslist
  • Do house or office cleaning for homes or businesses near you
  • Work as a website designer
  • Help people organize their homes or offices

The list of side hustles you could do really is endless. Figure out a side hustle that will work for you by making a list of your skills and talents.

From there, you can take that list and find side hustles where you can use your talents to make extra money. Then commit to putting all extra money earned toward mortgage payoff.

Bonus: You never know when a side hustle will turn into a full-time money-making venture. I started a side hustle as a freelance writer six years ago.

Now I make tens of thousands of dollars a year working part-time from home. My “side hustle” has changed my life. It allows me to support my four kids on my own in a comfortable fashion, yet still be at home with them.


There are many ways to pay down your mortgage early. You can focus on one of the ways mentioned here, or do several of them together for super fast mortgage payoff.

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