8 Smart Ways to Pay Off Your Mortgage Early

Father with son in front of home

Share this

Buying a home is likely the biggest financial purchase you’ll make in your lifetime. If you’re looking for ways to pay off your mortgage early, these  strategies, combined with advice from your CPA or other financial advisor, can help you reduce your debt and make your home-ownership dream come true faster.

1. Build an Emergency Fund

Don’t funnel all your money into your mortgage without protecting yourself first. If your car breaks down, or you lose your job, or break both legs skiing and have to go on short-term disability, you need a financial cushion handy. Otherwise, you may end up drawing from home equity and undoing months of progress. Build an emergency fund and make sure you’ve got a minimum of 3-6 months’ worth of cash to live on before you devote energy to paying off your mortgage faster.

2. Make Extra Payments

In order to pay off your mortgage early, you’ll need to pay more. The trick is finding a painless method. One common strategy is paying bi-weekly instead of once a month. That way, you’ll make 26 half payments, or 13 full payments instead of 12. If you can’t pay bi-weekly (or you prefer to pay once a month), try adding an extra 1/12 to each monthly payment.

3. Use Your Windfalls

You probably get a tax refund every year. Depending on your job, you may also receive bonuses or commissions in addition to your base salary. Commit to using these windfalls as bonus principal payments to own your home faster.

4. Round Up

If your mortgage is about $200,000 with a monthly payment of $955, you may mentally round up to $1,000 when planning your budget. Rounding up just that $45 from the beginning can cut two years and $12,000 off the total amount you’d pay over the life of the loan. Add an annual $1,000 windfall bonus to slash an additional four years and close to $20,000.

5. Cut Excess Expenses

So where does all this extra money come from? It may not feel easy to scrape together that extra $50, $100, or more per month. Many experts will advise you to cut frivolous expenses like coffee or cable, but before you go that route, there’s another way. Instead of giving up favorite treats, look for wasted cash. Are you paying $20 a month on magazines you don’t read or hosting fees for a website you created and abandoned years ago? No amount is too small. Even cutting a $12 monthly expense and putting it toward your mortgage will save thousands in the long run.

6. Take on a Side Gig

Almost any hobby can to turn into a side business. Sell baked goods or knitwear, fix bikes or pet-sit, or channel a passion for gardening into a farmer’s market stand. If you take this route, keep the IRS happy. Set aside money for quarterly tax payments and keep thorough records for your side business. Be sure to check local laws on running a business from home, such as whether or not you can sell goods made in your own kitchen.

7. Refinance (or Pretend To)

If you opt to refinance your mortgage for a 15- or 20-year loan instead of the standard 30-year term, you can save big on interest. You will, however, also pay more each month. If you’re on the fence, do a trial run of the new rate. Calculate your higher, refinanced payment and send that amount each month (make a note to the lender that the extra dollars should go toward principal, so your lender doesn’t just roll it into next month’s payment). You’ll get a real-world test of whether the new amount fits your budget. Since you’re not locked in, you can switch back to your old payment if you need to without any headaches. If the new amount does fit your budget, you can pay off your mortgage in the shorter time frame without actually going through a refi.

8. Share Your Space

Outgoing people with an extra bedroom may find they enjoy renting to a guest or roommate. Companies like Airbnb let you list your space for travelers from across the world. Your yard can also be a good space to rent. People living near a major city may find aspiring gardeners eager to pay to grow veggies on their plot. As always, check your state, county and neighborhood regulations before taking the plunge.

Jessica Sillers
Jessica Sillers writes about business strategy, personal finance and careers. When she’s not writing, she enjoys reading, travel and exploring D.C. with her husband.

See your score.
Reach your goals

Begin your financial journey with Credit Sesame today.  Get your FREE credit score in seconds.

By clicking on the button above, you agree to the Credit Sesame Terms of Use and Privacy Policy.

See your score.
Reach your goals.

Begin your financial journey with Credit Sesame today.
Get your FREE credit score in seconds.

By clicking on the button above, you agree to the Credit Sesame Terms of Use and Privacy Policy.

Advertiser Disclosure

Many of the offers that appear on this site are from companies from which Credit Sesame receives compensation. This compensation may impact how and where products appear (including, for example, the order in which they appear). Credit Sesame provides a variety of offers, but these offers do not include all financial services companies or all products available.

Credit Sesame is an independent comparison service provider. Reasonable efforts have been made to maintain accurate information throughout our website, mobile apps, and communication methods; however, all information is presented without warranty or guarantee. All images and trademarks are the property of their respective owners.