10 Little Known Secrets To Pay Off Your Mortgage Early

Raise your hand if you hate paying your mortgage every month.

Not only is it your largest monthly bill, but it feels like you will never pay it off since most of your payment goes towards interest.

Frustrating times for sure.

But there are ways to pay off your mortgage early.

In fact, I highlight 10 tricks to pay off your house early below.

You can pick out the one that suits you best, or find a way to combine multiple tips to pay off your mortgage faster.

Imagine not having a mortgage payment any longer.

What would that enable you to do?

You could put more money towards retirement.

You might even be able to retire early since you no longer have a huge monthly bill hanging over your head.

Or you could find a job that you love, regardless of the pay.

In other words, financial freedom no longer is a wish, it can be a reality.

By slashing your mortgage out of your monthly budget, you could earn less, and still get by financially.

Or you could use that money to take amazing vacations every year.

Think of all the places you want to visit and experience!

What are we waiting for?

Let’s get started learning about these little known ways to pay off your mortgage fast so you can use your extra cash for other things!

10 Tricks To Pay Off Your Mortgage Early

#1. Use Tax Refunds

pay off your mortgate fast

According to the IRS, the average refund for 2019 was a whopping $2,535!

I’m not going to get into the debate about getting such a large refund here, but I am going to show you the power of this refund if you use it to make extra principal payments.

Let’s say you bought a house and took out a 30-year term loan for $200,000 at 5% interest.

You pay the balance due every month except for May.

In May, you make an additional one-time extra payment of $2,700 which is your tax refund.

What effect does this have?

If you do this for just 5 years, you will shave 4 years off your mortgage and save over $35,000 in interest!

Use this mortgage pay off tip for 10 years and you knock off close to 7 years and save over $54,000 in interest!

Use this trick for the entire length of your mortgage and you knock off close to 10 years and save over $66,000 in interest!

I know it can be tempting to spend your tax refund on something else.

But if you can put it towards your mortgage debt you will save a ton of money.

I’ll even make a compromise with you.

Take 10% of your tax refund and spend it however you want.

Then take the other 90% and put that towards your mortgage.

Your savings and payoff date won’t be as exciting as what I showed you above, but it’s better than spending the entire refund.

#2. Bi-Weekly Mortgage Payment

The next mortgage pay off trick is to create a bi-weekly mortgage payment system.

Biweekly payments takes your monthly payment and cuts it in half, so that you make a half payment every other week, or twice a month.

The idea behind this is that if you are paid bi-weekly, there are 26 pay periods in a year.

If you make 26 half payments, you actually make 13 full payments.

This is one extra payment a year compared to simply making a mortgage payment once a month.

This one extra payment each year adds up over time.

Some banks offer to do this for you but they often charge extra fees, like a set up fee or other ongoing fees.

You can skip the fees and do this yourself.

But don’t simply mail in half of your payment every other week. Most banks won’t process it that way.

They will wait until they receive your full payment amount and then process the payment.

In other words, they will sit on the half payment you sent in until you send in the other half.

Then they will apply the full payment to your account.

Instead, take one monthly payment and divide it by 12. You then pay this amount as extra principal each month for the year.

So let us use the example above of a $200,000 mortgage at 5% for 30 years.

Your monthly mortgage payment is $1,074. If you divide this by 12, you get $89.50.

Each month you pay $1,163.50 towards your mortgage.

This total is your regular monthly payment of $1,074 and the additional $89.50.

On your remittance slip you send along with your check, there is usually a line for an additional principal payment.

Put the extra $89.50 on this line.

If you pay online, there is usually a place for noting extra principal as well.

Come the end of the year, you will have made one extra mortgage payment, which is the same as setting up a bi-weekly mortgage payment.

By following this technique, you will knock off close to 5 years on your mortgage and the amount of interest you save is over $33,000.

#3. Use Credit Card Rewards

Credit-Card-Rewards

Wouldn’t it be great if you could use credit card rewards to pay off your mortgage faster?

You can!

We had our last mortgage through Wells Fargo and one day when I logged into our account, I saw a note about their Home Rebate Card.

For the first six months, you earn 5% cash back on gas, groceries and drugstore purchases and 1% on everything else.

After the six months are up, you earn a flat 1% on purchases.

The nice thing about the card is that there is no annual fee and the cash back is automatically transferred to your mortgage principal.

If you don’t have a mortgage through Wells Fargo, you can still do this mortgage pay off trick and pay off your mortgage fast.

Here is the process.

  1. Open up an American Express Blue Cash Card.
  2. Put your groceries and gas on this card since you earn 6% and 3% cash back respectively.
  3. Open up a CIT Bank savings account.
  4. Redeem the cash back on the Amex card for a statement credit.
  5. Transfer that amount from your checking account to your CIT Bank savings account.
  6. At the end of the year use this money to make an extra mortgage payment.

You make the transfer from checking to savings since you never had to pay the amount you took a statement credit for.

If you spend $150 a week on groceries and $50 a week in gas, you would earn $625 a year in cash back.

Apply this to your mortgage once a year and you knock off over 3 years and save more than $20,000 in interest!

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Of course, you don’t want to go into debt when doing this, otherwise the point of paying off your mortgage early is lost.

So make sure you are smart about how much you spend when taking advantage of this mortgage pay off trick.

#4. Pay Extra At The Start

As I mentioned at the beginning of this post, when you first start making payments on your mortgage, you pay mostly interest.

As you move towards the end of your mortgage, you pay mainly principal.

As I mentioned at the beginning of this post, when you first start making payments on your mortgage, you pay mostly interest.

As you move towards the end of your mortgage, you pay mainly principal.

The reason for this is that banks want their money back first.

By being smart and making extra payments at the start of your mortgage will lower your principal balance faster, saving you thousands of dollars and paying off your mortgage early.

Let’s use the same example from earlier ($200,000 loan at 5% for 30 years), only this time we will make an extra $100 payment each month for 5 years.

Doing this shaves off close 2 years of your mortgage and saves close to $17,000 in interest.

If you can afford to put $200 extra towards your monthly mortgage for the next 5 years, you knock off 2 years of your mortgage and save over $31,000 in interest.

And if you can always put $200 extra towards your mortgage, you will pay it off 9 years early and save $61,000 in interest.

#5. Refinance

When you refinance, you either get a lower interest rate or you shorten the term of your mortgage.

Doing this will help you to pay off your mortgage faster and save you money.

In some cases, when interest rates drop by a good amount, you can shorten your term and interest rate, and still have the same monthly payment.

The amount of your savings will vary based on your mortgage interest rate, the loan term, and your loan balance.

If you refinance from a 30-year mortgage to a 15-year loan, you will have a higher monthly payment in most cases.

But because you shortened the term, you will save thousands of dollars in interest.

The main downside to refinancing is the closing costs.

Typically they run around $3,000.

You could roll them into your new mortgage, but then you are paying interest on that money as well.

You are better off just paying the closing costs out of your pocket and not rolling them into the refinance.

Some banks will offer no closing cost refinancing which can be a great way to save some money.

Just be sure to compare their rate to another bank to be certain they aren’t charging you a higher interest rate.

#6. Pretend To Refinance

Fake Refinance

Because of the work involved with refinancing and the closing costs involved, there is another option to save money and pay off your mortgage fast.

It’s called a fake refinance.

Simply figure out how much a monthly payment would be on a refinance.

Then commit to making that payment every month without actually spending the money to refinance.

For example, let’s use the same numbers, a $200,000 mortgage for 30 years at 5%.

A refinance of $200,000 at 3.25% for on a 15-year mortgage would have monthly payments of $1,400.

Right now you are paying $1,074 per month.

If you don’t refinance and are 5 years into your mortgage and start paying $1,400 each month, you will pay off your mortgage 10 years sooner and save close to $55,000 in interest charges.

That is some serious savings!

The only catch here is that you have to be committed to paying the fake refinance amount and not just your standard payment.

#7. Round Up Payments

Rounding up your payment is also a great little known way to pay off your mortgage fast.

As I mentioned, your current monthly payment is $1,074. What if you rounded up to $1,100 per month?

That is just $26 more each month.

While you would only knock 2 years off of your mortgage, you would save over $10,000 in interest charges.

I know that a couple dollars doesn’t sound like much, but it makes a difference.

On our mortgage, if I pay just $6.85 extra per month, I save over $3,300 in interest over the life of the loan.

So don’t think a couple extra dollars isn’t worth it.

Put anything extra you can towards your mortgage each month.

To help with this, simply use Qoins.

This is an app that rounds up purchases and allows you to put the spare change towards your mortgage.

At month end, you have an extra $20 saved that you can now apply to your mortgage.

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How To Pay Off Your Mortgage In Half The Time

Pay Off Mortgage Fast

What if we combined some of these little known mortgage pay off tricks?

Could we cut our 30-year mortgage in half?

Which two tips sound the most reasonable to use?

Let’s combine rounding up along with paying extra at the start of the mortgage.

These allow for the most flexibility and will show us what a little extra payment does in the long run.

#8. Paying Extra And Rounding Up

For this example, we will round up $26 each month, plus we will pay an additional $125 each month.

So our new monthly payment is $1,225 per month.

With this method, you knocked off about 8 years and saved around $50,000 in interest.

Not bad for a small sacrifice, but we weren’t able to cut a 30 year mortgage in half.

Let’s try another combination.

#9. Bi-Weekly And Tax Refund

While the above option is great, let’s combine our tax refund and a bi-weekly payment.

Simply add $72 to your regular payment each month and use your entire tax refund to pay off the mortgage early.

If you combine both options, you will knock off 12 years and save around $81,000 in interest.

The only catch here is that a $3,000 tax refund each year is not a given.

It could change which could change your mortgage pay off as well.

This gets you closer, but you still aren’t able to pay off your mortgage in half the time.

#10. The Fastest Way To Pay Off 30 Year Mortgage

Finally, here is the fastest way to pay off your 30-year loan.

In fact, it will allow you to cut a 30 year mortgage in half.

This is for people who want to destroy their mortgage as quickly as possible.

To do so, we will use the following approach.

  • Use our tax refund. We will assume the average refund of $3,000 but only use $2,000 so you can do what you want with the rest. This will also help us in the coming years since a tax refund can change depending on your future financial situation.
  • Open cash back credit card. We will assume $1,000 in rewards each year to be put towards the mortgage.
  • Round up. We will use Qoins to round up our purchases and transfer that money to our mortgage annually. We will assume $750 in annual roundups.
  • Pay extra. Finally, we will additional payments of $150 extra a month towards the mortgage.

What is the result of all of this?

You will pay off your mortgage 15 years early and save over $98,000 in interest.

This is the best way to pay off your mortgage early.

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Of this extra amount we are paying each month, you only need to come up with $150.

This is because the credit card cash back and the round ups from Qoins are from your spending.

How can you come up with an extra $150 a month?

How To Make An Early Payoff Of Your Mortgage A Reality

I know all of these options sound great in theory.

The problem though is that you need more money in order to pay extra on your mortgage each month.

As it stands now, money is already tight.

What can you do to earn extra money and pay off your mortgage faster?

There are all sorts of ideas out there.

You can learn about many ways to earn more money either through side hustles or even how to make more money at work by reading through the posts in the build wealth section of this site.

Just by cutting a few monthly expenses and doing a little work on the side could easily bring in $250 extra each month.

It may seem like a small amount, but it makes a big difference in the long run.

If you combine some of the tricks to pay off your mortgage faster and can put this extra $250 you earn towards your mortgage each month, you could pay off your mortgage in 10 years.

Finally, you can keep track of your progress with Personal Capital.

This is what I use to get a quick look at our net worth and investments.

By adding my mortgage and house value, I can track the pay off process.

The reason I do this is for motivation.

There are times when you would rather buy something you want instead of putting the extra money towards your mortgage.

But then I log into my Personal Capital account, see the progress we made and how close we are getting to being mortgage free and it helps to get me excited again.

So I highly recommend doing this as well.

You can open your free account by clicking the link below.

Personal Capital Button

Frequently Asked Questions

frequently asked questions

Here are the most common questions I get asked when it comes to paying off your mortgage early.

How much money will I save if I make 2 extra mortgage payments a year?

This all depends on your current loan amount, interest rate and other factors.

But let’s give an example to give you a rough idea.

If you have a loan of $200,000 at 4% interest for 30 years, and you make just 2 extra payments a year, you will save over $37,000 and knock off 7 years from your loan.

Therefore, it is worth it to make 2 extra mortgage payments a year.

Is it smart to pay extra principal on my mortgage?

For most people, the answer is yes.

By paying extra every month on your mortgage, you save money on interest and you pay your mortgage off early.

Even if you can only pay an extra $10 or $20 a month extra, do it.

For example, if we again look at a $200,000 loan at 4% for 30 years, paying just $20 extra a month saves you over $6,000 in interest.

However, before you make any extra payments, check to make sure there are no pre-payment penalties.

These are rare nowadays, but you don’t want to get a charged a fee.

You can either read through your loan documents or call your current mortgage holder to get the answer.

Is it smarter to pay off my mortgage or invest my money?

I get asked this question of pay off debt vs investing all the time.

The only reason you would not pay extra principal on your mortgage is if you could earn a higher rate of return investing your money.

But even then, you need to be extremely disciplined and actually invest the money.

I’ve seen too many people with good intentions end up spending the money instead of investing it.

They will start out investing the $20 a month, but eventually they will give into temptation and use the money for something else.

Here is a great article about how you can combine both ideas and come out ahead.

How can I pay off my 30 year mortgage in 10 years?

I’ve outlined in this post many ways to pay off your mortgage early.

And by using a combination of the ideas, you can pay off your 30 year mortgage in 10 years.

But it will take sacrifice.

Let’s go back to our example of a 30 year mortgage at 4% for $200,000 with a monthly payment of $955.

To pay this off in 10 years, you need to pay an extra $1,070 every single month.

How can I pay off my mortgage in 7 years?

Paying off your mortgage in 7 years is going to take a greater commitment than paying off your mortgage in 10 years.

With a $200,000 loan for 30 years at 4%, you need to pay an extra $1,765 a month.

Not impossible, but you need to use the ideas I outlined above to find the ones that will make this a reality.

Is it better to get a 15 year mortgage or pay extra on a 30 year mortgage?

If you can afford the monthly payments, a 15 year mortgage is the better option.

This is because you will pay a lot less interest and you will be mortgage free 15 years sooner.

For example, let’s look at a $200,000 at 4% for both 15 years and 30 years.

15 Year Mortgage versus 30 Year Mortgage

With the 15 year mortgage, you pay less than $67,000 in interest. With the 30 year mortgage you pay close to $144,000 in interest.

That is a difference of more than $77,000 in interest alone!

What is the best way to be mortgage free?

The best way to be mortgage free is to buy a house you can easily afford the monthly payments for the shortest time.

This means if you can afford a 15 year mortgage, get it.

And you can put extra towards the principal every month.

This ensures that you will be mortgage free in less than 15 years.

How to I get the lowest interest rate possible on my mortgage or refinance?

The easiest way to get the lowest interest rate on your mortgage or refinance is to have good credit.

The higher your credit score, the lower the interest rate you will be charged.

This is because you are less risky of a borrower.

I advise my readers to get their free credit score so they know where they stand. Once you know what your score is, you can begin to work on improving it.

My favorite free credit score company is Credit Sesame.

Not only do you get your score for free, but they have a lot of great resources to help you work on improving your score.

Credit Sesame Button
Another important thing to do is to check your credit report.

A simple error like a wrong address or a creditor not reporting a payment you made can have a big impact on your credit score.

Finally, when you are shopping for a mortgage or a refinance, don’t take the first offer you get.

Get a couple of quotes and make them fight for your business.

When we were buying our house, our initial quote was 4.25%. At the time, this was a competitive rate.

I wasn’t going to follow my own advice, but decided to get another quote.

The second lender came back with 4%.

After some back and forth, we took out a mortgage with the first lender at 3.75%.

By simply getting multiple quotes, we saved close to $45,000 in interest even before making any extra payments.

Final Thoughts

So there you have a handful of little known ways to pay off your mortgage early.

The real key is to combine tips to supercharge your effort and pay off your mortgage in half the time.

The more money you can throw at your monthly mortgage payment, the quicker you will pay it off.

But even then, it will take time.

A mortgage balance is a large amount of money and you can’t pay it off overnight.

But don’t let this deter you.

It can be one of the smartest financial decisions you ever make.

Keep your eye on the goal of paying off your mortgage.

Imagine what it will feel like to not have that monthly payment any longer and what you will do with the money instead.

Any extra amount you can pay each month not only shaves off the time you have to pay, but it also saves you money in interest charges along the way.

And that interest savings really adds up.

12 thoughts on “10 Little Known Secrets To Pay Off Your Mortgage Early”

  1. I had a bi-monthly mortgage several years back and would recommend one as a way to pay off a mortgage early. The fees are usually minimal and you can knock up to 10 years off and save thousands!

    1. My wife set up a bi-monthly payment plan on her house when she refinanced. It’s a simple way to get an extra payment in every year. The best part is that at the time, they didn’t charge a fee (though looking back it was probably hidden somewhere in the refi docs.)

  2. I’ve also read that if you pay your mortgage in bi-monthly payments, you knock off a lot of interest in the end. So, if you combine a couple of these tips with the bi-monthly plan, you can definitely super-charge your mortgage payment.

    1. That’s the key, combining a few of the tips to really make a difference. We are currently using a bi-monthly payment plan to get in an extra payment and are going to start saving some extra money here and there to apply even more towards our principal.

  3. Dennis Williams

    Pay off your mortgage quickly and lower your interest rate too! Leaving your hard earned cash sitting in your checking account only benefits the bank. How? The bank uses our balance as security to borrow up to thirty times and then either invest or lend the borrowed funds. Currently, they are borrowing the money at 0%. What a deal!

    Use a line of credit to duplicate their system. The only reason for using the line is to build financial wealth. The funds drawn from the line of credit are applied as an additional loan payment. Withdraw the funds the same day you receive your income. Keep your balance to a minimum by immediately shifting ALL of your income to the line of credit as a loan payment.

    Second, reschedule all of your living expenses to the end of your line of credit’s billing period. Doing this keeps your line of credit balance low all month long. You are now using your income to reduce the interest that you’ll owe the bank. The best part is you will soon more income that you can immediately apply to your line.

    The additional payment you made immediately drops the balance on your loan accelerating your amortization schedule. This can work for any loan enabling you to borrow money from the bank with an effective interest rate of 1 to 2 percent. Depending on how much money you have after your bills are paid, You can easily payoff a 30 year mortgage or a student loan in half the time. This strategy beats any other payoff strategy. It is simple and safe.

    To learn more read my recent article, ‘Pay Less Interest on Your Line of Credit’ http://goo.gl/sl6OQB. Feel free to drop me a note!

    1. Everyone’s situation is different. I know that for some, taking the mortgage out to the full 30 years makes sense because they need the cash flow. For others, it makes sense to get the lower interest rate. At the end of the day, you have to figure out what your needs are.

  4. Wow Jon, powerful content there.. These are great and easily actionable tips. If only more people thought about knocking off debt logically like this.. Then again it really is all about the discipline, which is what people lack..

    Looking forward to getting into investing in property over the next few years 🙂

    1. So true Jef. Just a few small extra payments each year could mean a huge savings in the long run. Unfortunately, too many people are stuck in short-term thinking.

  5. Great list. I will be bookmarking this 🙂

    As someone who just bought his house this summer and new to mortgage, my wife and I are looking into strategizing our funds to balance between investing and mortgage paydown. We dont want to use the full term of the mortgage, so we will be looking into paying it down faster.

    Best wishes
    R2R

    1. Finding a line between the two is important. For my wife and I, we make it a point to pay more on our mortgage each month, just to save in interest over the long-term, but we make sure we still invest as much as we can too. Investments will earn us 8% annually whereas our house is a place to live. If we need money, we won’t be selling it and we would rather not take a loan out against it just to get by.

  6. Great post! We’ve been all about aggressively paying off the mortgage since we bought the house almost 4 years ago. When we bought it, we didn’t have 20% down and were paying PMI. We aggressively paid extra each month (used strategy #6…pretend to refinance) and thankfully experienced some appreciation in the price. After two years we actually refinanced (#5…refinance) and removed PMI AND got a lower interest rate. Instead of paying the new lower monthly payment, we utilized #7 (round-up) and paid a bunch more each month and have until this day. I like the credit card reward idea (#3) but my wife and I prefer to take a vacation each year (for free) on credit card points. #2 is interesting and might be something to look into though! Making 2 payments each month instead of just the one! Thanks for the post and the idea!

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