How to Pay Off Your Mortgage Faster
Some people will tell you that paying off your mortgage isn’t worth it because of the tax benefits or that money would be better spent elsewhere (e.g. invested).
It all depends on your mortgage balance, interest rate, and personal financial beliefs.
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I personally am in the camp of paying off your mortgage. That feeling of being “free” is priceless in my opinion.
Here is an article from Bankrate on the pros and cons of paying off your mortgage early you may want to think about.
My husband and I had 3 mortgages. We had 2 on the condo he bought when we first started dating (one with an interest rate of 6.8% and the other 9.5%!) and our home mortgage (4% interest).
We just paid off the mortgage with the 9.5% interest rate because the balance was under $9k. We took the money out of our emergency fund (which only earns 1.9% interest) and saved ourselves THOUSANDS of dollars in interest.
Here are 9 tips to help pay off your mortgage early too!
#1 USE A MORTGAGE PAYOFF CALCULATOR
I love crunching numbers. I know I’m nerdy like that.
Seeing just how much money we’d save in interest by paying our mortgage(s) off faster was enough motivation for me (we could literally buy another house!).
Here is a mortgage payoff calculator that allows you to see how much time you will cut off your loan when you make extra payments.
Just putting $100 extra towards our mortgage a month will shave off over 2 years on the loan.
Have fun playing with the mortgage payoff calculator and see just how much a little extra can shave off your own mortgage timeline.
#2 AUTOMATE
Set it and forget it!
This is one of the easiest ways to pay off your mortgage faster. (We also did this to pay off our debt and will use it to invest regularly).
We built up our emergency fund through automation and in turn were able to use it to make a big mortgage payment before the end of the year.
If you make a mortgage payment every two weeks (biweekly) you’ll end up making one whole extra mortgage payment each year.
#3 GET SERIOUS
We honestly didn’t start getting serious about paying off one of our mortgages until late this year. I crunched the numbers and decided it would be a realistic goal for us to pay off the $10,900 remaining balance early next year.
I started following more people in the #debtfreecommunity on Instagram and it turned on a light bulb in my mind.
It’s so inspiring to see other people make big financial strides even when it feels like the people around you are all naysayers.
What are you willing to sacrifice now to have more freedom later?
Create a vision board, use a debt thermometer or talk to people who have accomplished or share your same goals.
#4 MAKE EXTRA PAYMENTS
This might sound simple enough, but making extra payments here and there add up fast.
If you get money back from the government at tax time take it and put some straight to your mortgage.
If you come across a lump sum of money (inheritance, side hustle, pay raise) do the same.
You can also round up your mortgage payment to the nearest hundred and when you are able keep increasing the payment amount.
Related posts:
Multiple savings accounts for budgeting
Using a balance transfer to get out of debt faster
Best money books to manage your money
#5 SIDE HUSTLE
Sometimes your income is enough to cover the bills, but not enough to do major damage on your mortgage and that’s okay.
Side hustling is a great way to make big dents in your mortgage.
We live in a time where side hustles can be extremely profitable.
You can make extra money blogging like I do or you can check out this list of awesome side hustles.
Even an extra hundred dollars a month can make a big difference in the long run.
#6 PAY OFF OTHER DEBTS
Do you have a lot of credit card debt, student loans, or car payments?
Paying off some or all of these debts will give you extra money each month.
I paid off over $37k in student loans on a much lower income that what I make now. From there we paid off all of our credit card debt and learned a few lessons along the way.
If you pay off one credit card that had a minimum payment of $200 a month you can take that $200 and now put it towards the mortgage or you can take it and pay off your other debts.
I can’t say I was or am always disciplined in this way, but when you don’t tell your money where to go it tends to get absorbed and disappear and that sucks!
#7 CUT SPENDING
Here are the first expenses my husband and I cut when we were living paycheck to paycheck and needed extra cash to get out of debt.
At first these little things didn’t seem like much, but they started to add up after a few months. We stopped eating out completely and got rid of our gym memberships that we rarely used.
Our grocery bill was and still is one of our highest expenses. Using iBotta and these extra food saving tips helps keep it in check.
JOIN IBOTTA & GET UP TO A $20 BONUS
Again, take that “extra” money and have it work for you. Pay off your debts and start attacking the mortgage.
Any time we “needed” to buy something we used the free app/site Ebates (now Rakuten) to get cash back and put that money towards our bills.
JOIN RAKUTEN (EBATES) & GET A $10 BONUS
#8 DOWNSIZE
This isn’t a feasible option for everyone, but is one you should take time to consider.
Our current house is over $100k more than our previous home. Over time that is a LOT of money in interest.
We wanted a house that had a garage, a bigger yard and was in a better location for us. Now we are considering downsizing.
Not having a mortgage can open up many possibilities. Our current monthly mortgage payment just went up to close to $2,300. Even if it just went down $1,000, that money invested could turn into hundreds of thousands. It seriously blows my mind.
You don’t necessarily have to purchase a smaller house. It could be buying a cheaper (even bigger) one in a different area.
If I knew what I knew now before we became homeowners I would have saved more for a down payment and just saved more in general for household expenses.
Hindsight is always 20/20.
# 9 REFINANCE
It costs money to refinance a mortgage.
You can refinance for a shorter loan term to save money, you can refinance to bring your interest rate down or you can do both.
Before you make any commitments make sure you do your math.
Sometimes after all the fees (closing costs, taxes, etc.) it ends up being “cheaper” to just pay a little more each month than to refinance.
A good rule of thumb is to consider refinancing your mortgage if it’ll reduce your interest rate by at least 2%.
Shop around.
You don’t have to refinance your mortgage with your original mortgage company.
FINAL TIPS
Being mortgage free is not for everyone, but if you really want it..DO IT!
Make a vision board or debt payoff coloring page to track your progress so you can stay motivated.
If you automate your extra mortgage payments and gradually push yourself you’ll start to see results quicker.
Hustle hard and create extra income if you want to do some serious damage to your mortgage principal.
Above all else, don’t forget to have fun along the way!
