How to Pay Off Your Mortgage Faster: 9 Proven Strategies

The fastest ways to pay off your mortgage early are making biweekly payments (saves 4-6 years), adding extra principal each month and refinancing to a shorter term. On a $300,000 loan at 6.5%, paying just $200 extra monthly saves $72,000 in interest and pays off the loan 5 years early. Making one extra payment per year achieves similar results with less monthly commitment.

Why Pay Off Your Mortgage Early?

Paying off your mortgage faster offers significant benefits—but it’s not right for everyone.

Benefits of Early Payoff

Interest savings: On a $350,000 loan at 6.5% for 30 years, you’ll pay $446,000 in interest. Paying off in 20 years instead saves roughly $150,000.

Financial freedom: No mortgage payment means more flexibility. Job loss, retirement or career changes become less stressful.

Forced savings: Extra mortgage payments build equity—a form of savings you can access later through sale or home equity products.

Peace of mind: Many homeowners simply sleep better without debt hanging over them.

When NOT to Prioritize Mortgage Payoff

High-interest debt: Credit cards at 20%+ should be paid first. Your mortgage at 6% can wait.

No emergency fund: Build 3-6 months of expenses before extra mortgage payments. You can’t eat your home equity.

Missing employer 401k match: Free money beats mortgage payoff. Get the full match first.

Low mortgage rate: If your rate is 3-4% and investments average 7-10%, investing may build more wealth long-term.

Strategy 1: Biweekly Payments

Instead of 12 monthly payments, make 26 half-payments. This equals 13 full payments per year—one extra payment annually.

How It Works

Payment Type	Annual Payments	Extra Principal
Monthly	12 payments	$0
Biweekly	26 half-payments	1 full payment

Real Impact

$300,000 loan at 6.5%, 30 years:

• Standard payoff: 30 years, $383,139 total interest
• Biweekly payoff: 25 years 4 months, $314,000 total interest
• Savings: $69,139 and 4.7 years

Setting Up Biweekly Payments

Option 1: Through your servicer Some servicers offer formal biweekly programs. Watch for fees—some charge $300-$400 setup plus $5-$10 per payment. Avoid these.

Option 2: DIY approach

• Divide your monthly payment by 12
• Add that amount to each monthly payment
• Same result, no fees

Example: $2,100 monthly payment ÷ 12 = $175. Pay $2,275 monthly instead.

Strategy 2: Extra Monthly Principal

Adding even small amounts to principal accelerates payoff significantly.

Impact of Extra Payments

$350,000 loan at 6.5%, 30 years, $2,212 base payment:

Extra Monthly	Years Saved	Interest Saved
$100	3 years	$42,000
$200	5 years	$72,000
$300	7 years	$96,000
$500	9 years	$128,000

Making Extra Payments Count

Specify “apply to principal”: Without instructions, servicers may apply extra payments to future payments instead of principal.

Pay consistently: Regular extra payments beat sporadic large payments. Compound interest works in your favor.

Automate it: Set up automatic transfers so you don’t have to think about it.

Marcus Thompson adds $250 extra to each payment on his $320,000 mortgage. His 30-year loan will be paid off in 23 years, saving him $89,000 in interest.

Strategy 3: One Extra Payment Per Year

Can’t afford extra every month? One annual lump sum achieves similar results.

When to Make the Extra Payment

Tax refund: Average refund is $3,000—apply it to your mortgage.

Year-end bonus: Before it disappears into general spending.

Anniversary of purchase: Easy to remember.

Impact Comparison

$300,000 loan at 6.5%:

• One extra payment annually: Paid off in 25.5 years
• No extra payments: Paid off in 30 years
• Savings: 4.5 years and $65,000 interest

Strategy 4: Round Up Payments

Simple and painless—round your payment up to the nearest hundred.

Examples

Actual Payment	Rounded Payment	Extra/Month	Extra/Year
$1,847	$1,900	$53	$636
$2,134	$2,200	$66	$792
$2,567	$2,600	$33	$396

The extra amounts feel small but add up. On a $280,000 loan, rounding from $1,770 to $1,800 saves $18,000 and pays off 14 months early.

Strategy 5: Refinance to Shorter Term

Switching from a 30-year to 15-year mortgage dramatically accelerates payoff.

30-Year vs 15-Year Comparison

$350,000 loan at current rates:

Term	Rate	Payment	Total Interest
30 years	6.5%	$2,212	$446,320
15 years	5.75%	$2,912	$174,160
Difference		+$700/mo	-$272,160

When Refinancing Makes Sense

You can afford higher payments: The 15-year payment is significantly higher. Make sure it fits your budget comfortably.

Rate improvement: If you can drop your rate by 0.5%+ while shortening the term, it’s often worth it.

You’ve had your loan a while: If you’re 10 years into a 30-year loan, refinancing to 15 years means you’ll be done in 15 more years instead of 20.

Closing costs make sense: Calculate break-even. If costs are $5,000 and you save $300/month, break-even is 17 months.

Jennifer Walsh refinanced from a 30-year at 7% to a 15-year at 5.875%. Her payment increased $580, but she’ll pay off 12 years sooner and save $198,000 in interest.

Strategy 6: Recast Your Mortgage

After making a large principal payment, recasting reduces your monthly payment while keeping the same term.

How Recasting Works

1. Make a lump sum payment (typically $5,000+ minimum)
2. Request recast from servicer
3. Lender re-amortizes loan over remaining term
4. New lower monthly payment

Recast vs Extra Payment

Action	Result
Extra payment only	Same payment, shorter term
Recast after payment	Lower payment, same term

Recast fee: Usually $150-$500

Who offers it: Most conventional loan servicers. FHA and VA loans typically can’t be recast.

When Recasting Makes Sense

• Received inheritance or windfall
• Want lower monthly obligation for cash flow
• Prefer flexibility over fastest payoff

David Chen received a $50,000 inheritance. He paid it toward his $280,000 mortgage and requested a recast. His payment dropped from $1,770 to $1,450, freeing up $320/month for other goals.

Strategy 7: Apply Windfalls to Principal

Irregular income can accelerate payoff without changing your budget.

Windfall Sources

• Tax refunds
• Work bonuses
• Inheritance
• Side hustle income
• Garage sale proceeds
• Insurance settlements
• Gifts

The Psychology Trick

Treat windfalls as money you never had. If it goes straight to mortgage before hitting your checking account, you won’t miss it.

Automation: Some employers let you direct deposit a portion of your paycheck to a secondary account. Send bonus checks there, then to mortgage.

Strategy 8: Downsize or Relocate

Sometimes the fastest path to mortgage freedom is a smaller mortgage.

Downsizing Math

Current situation:

• $400,000 home, $320,000 mortgage
• $2,500/month payment

After downsizing:

• $280,000 home, $200,000 mortgage
• $1,550/month payment
• $950/month savings or faster payoff

Relocation Arbitrage

Move from high-cost to low-cost area:

• Sell $600,000 California home
• Buy $300,000 Texas home outright
• Mortgage-free with money left over

This strategy works especially well for remote workers and retirees.

Strategy 9: House Hack

Live in one unit and rent others to accelerate payoff.

How It Works

Buy a duplex, triplex or fourplex. Live in one unit, rent the others. Rental income covers most or all of your mortgage.

Example:

• Fourplex purchase: $450,000
• Your unit: $1,500/month (equivalent rent)
• Three rentals: $1,400 each = $4,200
• Mortgage payment: $2,850
• After rentals: You live free and have $1,350 extra for principal

House Hacking Benefits

• Rental income pays your mortgage
• Extra cash flow for faster payoff
• Build landlord experience
• FHA allows 3.5% down on 2-4 units

Mortgage Payoff Calculator Approach

Run your own numbers to see which strategies work best for your situation.

Key Inputs

• Current balance
• Interest rate
• Monthly payment
• Extra payment amount
• Years remaining

What to Calculate

1. Current payoff date and total interest
2. New payoff date with extra payments
3. Total interest saved
4. Break-even point for refinancing

Most mortgage calculators online include “extra payment” options. Bankrate, NerdWallet and your servicer’s website likely have free tools.

Common Mistakes to Avoid

Ignoring Higher-Interest Debt

Paying extra on a 6% mortgage while carrying 22% credit card debt costs you money. Pay off high-interest debt first.

Draining Emergency Fund

Never sacrifice financial security for faster mortgage payoff. Job loss with no emergency fund and limited equity is a recipe for foreclosure.

Prepayment Penalties

Some loans (especially older ones) charge penalties for early payoff. Check your loan documents. Most conventional loans today have no prepayment penalty.

Not Specifying Principal

Extra payments may be applied to future payments, escrow or interest rather than principal. Always mark payments “apply to principal” and verify they’re applied correctly.

Neglecting Retirement Savings

If you’re not maxing out tax-advantaged retirement accounts, you may be better off investing than paying down a low-rate mortgage.

Frequently Asked Questions

How much faster can I pay off my mortgage?

With aggressive strategies, you can cut a 30-year mortgage to 15-20 years. Even modest extra payments (biweekly or rounding up) save 4-6 years. The exact timeline depends on your loan amount, rate and extra payment size.

Is it better to pay extra principal or invest?

If your mortgage rate is above 6%, paying it down offers a guaranteed 6%+ return. If your rate is 3-4%, investing in diversified index funds historically returns more. Consider your risk tolerance and peace of mind as well.

Do extra payments go toward principal or interest?

When specified correctly, extra payments reduce principal. This means less principal accrues interest next month, accelerating payoff. Always confirm with your servicer that extra payments are applied to principal.

Can I pay off my mortgage in 5 years?

Possible but difficult. On a $300,000 mortgage, paying off in 5 years requires about $5,800/month. Most homeowners aim for 15-20 year payoff with extra payments.

Should I pay off my mortgage before retirement?

Most financial advisors say yes. Eliminating your largest monthly expense provides flexibility and security in retirement. However, don’t sacrifice retirement savings to pay off mortgage early—balance both goals.

What happens when I pay off my mortgage?

Your servicer files a satisfaction of mortgage with the county. You’ll receive your deed (if held by lender) and no longer have a monthly payment. You’re still responsible for property taxes and insurance, which you’ll pay directly.