How to Pay Off Your Mortgage Early: Strategies That Work
Paying off your mortgage early can save you tens of thousands of dollars in interest and give you financial freedom years sooner. Here are proven strategies to accelerate your mortgage payoff.
The Power of Extra Payments
On a $300,000, 30-year mortgage at 6.5%, adding just $200 per month can:
7.5 years
Shaved off your loan term
$95,000+
Saved in interest
Strategy 1: Make Extra Principal Payments
The simplest approach is to pay extra toward principal each month. Even small amounts add up:
| Extra/Month | Years Saved | Interest Saved |
|---|---|---|
| $100 | 4 years | $52,000 |
| $200 | 7.5 years | $95,000 |
| $500 | 12 years | $145,000 |
| $1,000 | 16 years | $175,000 |
Based on $300K loan, 6.5% rate, 30-year term
Strategy 2: Bi-Weekly Payments
Pay half your mortgage every two weeks instead of once monthly. This results in 26 half-payments (13 full payments) per year instead of 12.
Example: $1,500 Monthly Payment
- • Standard: $1,500 × 12 = $18,000/year
- • Bi-weekly: $750 × 26 = $19,500/year
- • Extra per year: $1,500 (one extra payment)
- • Result: Pay off 4-5 years early, save ~$40,000 in interest
Strategy 3: Round Up Payments
Round your payment up to the nearest $100. It's an easy way to pay extra without feeling the impact:
- • Payment of $1,495 → Pay $1,500
- • Payment of $1,823 → Pay $1,900
- • Small amounts add up over time
- • Easy to automate with your bank
Strategy 4: Apply Windfalls
Use unexpected money to make lump-sum principal payments:
- Tax refunds
- Work bonuses
- Gifts or inheritance
- Sale of items
- Side income
Strategy 5: Refinance to a Shorter Term
Refinancing from a 30-year to a 15-year mortgage can:
- Secure a lower interest rate
- Force disciplined payoff schedule
- Save significantly on total interest
Use our refinance calculator to see if this makes sense for you.
Important Considerations
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Check for prepayment penalties — Some loans charge fees for early payoff. Most conventional loans don't, but verify.
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Specify "principal only" — When making extra payments, ensure they go toward principal, not future interest.
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Don't neglect other financial goals — Make sure you have an emergency fund and are saving for retirement first.
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Consider opportunity cost — If you can earn 8-10% investing, that might beat paying off a 6% mortgage.
Calculate your early payoff savings