Strategies to Pay Off Your Mortgage Fast

One of the best dreams is to have a home you can call your own. However, if it’s via a mortgage, chances are you’d be paying it for up to 30 years. This means you’ll need a stable source of income throughout those years so you won’t miss your payments. If not, you might lose your home to the bank.

While you’re young and has a source of income, here are some strategies to help you pay your mortgage faster:

1. Assign A Budget For Extra House Payments

Before applying for a mortgage, using a rates table or mortgage calculator helps you understand mortgage rates. This means you can get an idea of how much interest rate there is for a 30-year mortgage. You’ll also learn how much monthly amortization you’ll be paying for the next 30 years. And most importantly, you can use the mortgage calculator to compute how much you’ll be saving if you make extra house payments.

However, not all mortgage providers accept extra payments but with prepayment penalties. Some companies also have certain times of the year in accepting such prepayments. That’s why it’s vital to ask your prospect provider about such terms before signing a contract with them.

Moreover, you should also ask if such extra payments will apply to your principal balance. This ensures that your lender won’t use your prepayments for the following month’s payment.

You may also want to check if your lender offers biweekly mortgage payments. You can pay half of your dues every two weeks through this method. When computed, you’re completing 13 full monthly payments since you’ll be making 26 half-payments in total. As a result, you can reduce the years of paying your mortgage instead of enduring 30 years.

2. Try To Refinance

While paying a 30-year mortgage lets you pay a lower monthly payment, the interest you’d be paying is relatively higher. For a mortgage with a 15-year period, the average interest rate is 2.92% while 3.58% is for a 30-year fixed mortgage. This also means that you’ll be paying higher monthly amortization, but the good thing is, you’ll enjoy a lower interest on your overall loan.

For instance, your monthly payment for a 15-year fixed mortgage would be USD$1,648 when you’re buying a property worth USD$300,000 with a 20% down payment. On the other hand, you’ll be paying USD$1,088 for a 30-year fixed mortgage for the same property value and down payment. Even if you’re paying USD$560 more than the 30-year mortgage, you’ll only be paying it for 15 years. In total, you’ll only be paying USD$296,640 for fifteen years while it’d amount to USD$391,680 when you choose to continue your 30-year fixed mortgage.

Especially if you have more sources of income, refinancing it to a shorter term would be a better idea. Even if you’re paying higher monthly payments, you’d be better off using your extra income so you can pay off your mortgage faster.

3. Use Extra Cash To Pay Your Principal

Another way is to use your unexpected influx of cash to make lump-sum payments on your principal. Any extra money includes profits from selling valuables, inheritance, or bonuses at work. Instead of using such cash to buy new gadgets or clothes, use it to pay for your principal.
However, you may also have to verify if your lender allows paying lump-sum on principal without charging any fee. Most importantly, ensure that such payments are meant for the principal and not for the following monthly payments mentioned above.

4. Recast Your Mortgage

Recasting is similar to paying your principal in a lump sum. However, the latter doesn’t affect your monthly payment while recasting lets you adjust your amortization. This means that your lender will re-amortize your loan to reflect your new balance. This also means you’ll be paying a lesser monthly payment.

Aside from that, you’ll be paying off your mortgage earlier than your original contract. This means you can save money on your overall interest.

However, some lenders don’t offer such a payment. Thus, it’s still best to ask your loan provider about it before applying for a mortgage. In addition, this strategy doesn’t apply to US Department of Veterans Affairs (VA) and Federal Housing Administration (FHA) mortgages.


It’s not bad to have a 30-year mortgage as some may not afford to pay high monthly amortization. However, if you want to pay off your mortgage faster, you may want to consider the strategies above. There are many ways to decrease the years of paying your mortgage, from biweekly payments to lump-sum to recasting. Try them now, and you’ll reap the benefits in due time.

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