7 Ways to Pay Off Your Mortgage Faster

Many homeowners dream about the day they pay off their mortgage, and there is good reason.

This means no longer a large monthly payment, no longer a costly interest fee, and for most homeowners, it can free up thousands of additional cash flows. Unfortunately, since most U.S. mortgages have a 30-year term, it will take decades to pay off the mortgage. It's only when you don't sell your home and move before that, it's possible to buy another home and start the whole process.

Are you looking for financial freedom? It's possible, but some planning is needed. Read these seven tips to learn how to pay off your mortgage faster and determine which one is best for you.

In this article:

Read more: How much percentage of your income should be mortgaged?

If you want to know how to repay your home loan quickly, paying a mortgage every two weeks is one of your best choices. With this strategy, you will pay for your monthly mortgage, distribute it halfway, and then make half the payment to your mortgage lender every two weeks (for example, every other Friday).

Since there are 52 weeks a year, there are 13 full payments per month each year. This doesn't seem to be big, but over time it can cut your loan for years and thousands of dollars in mortgage interest.

Here is an example: Suppose you take out $400,000 on a 7% mortgage loan and at a 7% mortgage rate, you will make your first payment in September 2025. This will give you a monthly payment of $2,661 with an estimated mortgage return date of August 2055. Please refer to the payment chart below below for this payment method.

Maybe the biweekly payment doesn’t match your payment, or you just don’t want to deal with the hassle of biweekly payments. If so, an additional mortgage payment is promised every year at any time of the year. (Maybe when you get an annual tax refund or holiday bonus.)

As with the biweekly payment strategy, this will reduce the balance of the mortgage principal faster and reduce your long-term interest fees. A quick tip, though: the earlier you can make an extra payment, the better, as it reduces the interest you owe in all subsequent payments.

When you make these additional payments, be sure to tell your lender to apply it directly to the principal. Otherwise, they may store it in your hosting account and simply submit it on your regular expiration date, negating the benefits.

Another option is to pay extra occasionally. It may not be as good as paying extra, but when you pay interest, every point is important.

A good idea is to use this strategy with surprises – you will receive unexpected money throughout the year. This can include things like inheritance from loved ones, tax refunds, birthday gifts or big tips or commissions.

And, don't forget to tell your lender to apply these additional payments to your mortgage principal, not your interest or any other expenses.

You may also consider paying for your mortgage. If your payment price is $2,661.21, as in the example above, it can reach up to $2,700 if your cash flow allows.

Again, make sure your lender puts this extra money into the client and should change significantly on your long-term interest cost and return schedule.

Refinancing mortgages are another strategy that can help you repay your loan faster. There are several ways to do this, but if you can get a lower mortgage rate than your current loan, that's the best option. Not only will this immediately reduce your interest costs, but it can greatly affect your earnings time if you continue to pay on a new loan.

For example, if you have a $250,000 loan balance that has a mortgage term of 30 years and an interest rate of 8%, you are currently paying about $1,834 per month. If you refinance the loan as a new 30-year loan at 6.75% interest, your payment will drop to around $1,622. As long as you continue to make old payments, you add $212 to your main balance each month.

learn more: The best mortgage lender

Refinancing to a shorter loan term can also help borrowers repay their loans faster, as it spreads balances in fewer months. Remember that shorter loans come with higher monthly payments. (Mortgage lenders usually reward you with lower interest rates. According to Freddie Mac, the average interest rate for a 30-year loan is currently hovering below 7%. In 15-year loans, the average interest rate for a loan is slightly below 6%.)

To understand what refinancing can do for your return schedule and expenses, let’s take a look at an example. With Borrower 1, you will see a 300,000 30-year loan with an interest rate of 6.5% (withdrawn in September 2025) if paid on time in thirty years. However, Borrower 2 refinances the same loan after five years of loan at a rate of 5.75% for 15 years.

Yahoo Tips: Use our free mortgage calculator to see how different interest rates and term lengths affect your financial situation.

Finally, hitting your mortgage may help. With this strategy, you make a one-time payment of the principal balance, and then your lender redistributes your loan, spreading the remaining balance and interest for the rest of the semester.

Technically, this is to lower your monthly payments and make things more affordable, but like some other strategies, you can use it to pay off your loan in advance. Even after recasting, you just need to keep on with the older higher payments.

Remember that not all lenders will allow recasting, and for those who do so, they may require you to show financial difficulties (which means you have trouble with your current payment). Recasting costs may also be required.

Learning how to repay mortgages quickly is only part of the equation. You also need to know when to go for it - when to make a mortgage early may not be a wise move for your family.

Generally speaking, it may be smart to pay off your loan faster if you have the following situations.

If your interest rates are extremely low, you may not want to pay off your loan early (think mortgage rates were less than 3% during the 19th pandemic). In this case, you might be better off spending the extra money on your investment, which could be more rewarding than saving 2% to 3% of your mortgage every year.

The fastest way to pay off your mortgage is to pay your principal balance every two weeks or regularly. You may also consider refinancing a low interest rate or shorter mortgage.

If you pay an additional $1,000 to your mortgage every month, you can significantly reduce the long-term interest cost and pay off your loan faster. The exact amount you will save depends on the balance, term and interest rate.

To pay off your 30-year mortgage within 10 years, you will need to make additional payments or add monthly payments. Paying a mortgage every two weeks can also help you repay your loan faster (but may not be anytime soon).

By regularly putting $100 into mortgage payments, you will lower your principal balance faster, pay off your loan faster, and greatly reduce the total interest you pay.

Since paying off your mortgage early requires a lot of capital, you can reduce your overall liquidity. This can make it difficult to deal with any financial emergencies that arise. If you already have a low mortgage rate, this is not the best financial move either. You may make more money by investing your extra money in the stock market or other assets that will make more money over time.

This article is from Laura Grace Tarpley