That monthly mortgage payment can feel like a permanent resident in your life, a houseguest who overstayed their welcome by about 30 years. It shows up every month, eats a huge chunk of your budget, and doesn’t even help with the dishes.
Imagine a life without it. You could finally afford that elaborate water feature for the garden, travel without checking your bank account every five minutes, or just enjoy the glorious freedom of owning your home outright. Getting rid of your mortgage faster than planned is a completely achievable goal with a bit of strategy.
Here is how you can give that mortgage an early eviction notice.
1. Make Larger Monthly Payments
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Making extra payments feels like giving yourself a high-five from the future. Every dollar you pay above your required monthly amount goes directly toward the principal loan balance. This is powerful because interest is calculated on that principal. A smaller principal means less interest accrues, and you start chipping away at the actual debt much faster. Even an extra $100 per month can shave years off your loan.
Quick Summary:
- Why it’s a good option: It reduces the total interest you’ll pay over the life of the loan, saving you thousands of dollars. It also builds equity in your home at an accelerated rate. You don’t need a huge lump sum to get started; consistency is what matters.
- Action: Pay more than the minimum mortgage payment each month.
- Benefit: Reduces loan principal faster, cutting total interest paid and shortening the loan term.
- Next Step: Use an online mortgage calculator to see how different extra payment amounts will impact your payoff date.
2. Refinance When Rates Are Low
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Refinancing means replacing your current mortgage with a new one, ideally at a lower interest rate or with better terms. When market rates fall below the rate on your existing loan, refinancing could reduce the amount of interest you pay over time.
This may lower your monthly payment. However, if your goal is to pay off the mortgage faster, refinancing into a shorter loan term (such as a 15-year instead of a 30-year mortgage) is typically more effective. A shorter term often comes with a lower interest rate and allows you to build equity faster, though monthly payments are usually higher.
Quick Summary:
- Why it’s a good option: A lower interest rate means more of your payment goes to the principal. A shorter loan term forces a faster payoff. You might even find your payment on a 15-year loan isn’t much higher than your current 30-year payment, especially with a good rate.
- Action: Replace your current mortgage with a new one at a lower interest rate or with a shorter term.
- Benefit: Lowers the total interest paid and sets a definite, earlier end date for your mortgage.
- Next Step: Monitor interest rate trends and consult a mortgage broker to understand refinancing costs and potential savings.
3. Make a Lump-Sum Payment
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Did you get a work bonus, a tax refund, or an inheritance from a long-lost aunt who apparently owned a chain of successful cat cafes? Before you splurge on a life-sized statue of your dog, consider throwing that windfall at your mortgage. Applying a large, one-time payment directly to your principal can make a serious dent in your loan balance and dramatically shorten its lifespan.
Quick Summary:
- Why it’s a good option: It provides a significant, immediate reduction in your loan principal. The effect is instant and can cut years and tens of thousands of dollars in interest off your mortgage. It’s a powerful move for those who receive unexpected cash.
- Action: Apply a large, one-time payment from a bonus, inheritance, or other windfall directly to your mortgage principal.
- Benefit: Instantly reduces your loan balance, saving a substantial amount on future interest.
- Next Step: When making the payment, specify with your lender that the entire amount should be applied “to principal only.”
4. Live Below Your Means
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This sounds like advice your grandparents would give, and that’s because it’s timelessly effective. Living below your means is the simple art of spending less money than you make. It requires a conscious decision to prioritize financial goals, like paying off your house, over discretionary spending. By creating a gap between your income and expenses, you free up cash that can be used to help reduce your mortgage balance or support your retirement plans.
Quick Summary:
- Why it’s a good option: It’s a sustainable, long-term strategy that doesn’t depend on windfalls or market conditions. It builds strong financial discipline that benefits all areas of your life, not just your mortgage.
- Action: Intentionally spend less than you earn to create a surplus of cash.
- Benefit: Creates a reliable source of extra funds to put toward your mortgage every month.
- Next Step: Create a detailed budget to track your income and expenses. Identify areas where you can cut back, like dining out or subscription services.
5. Get a Roommate or Rent Out Space
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Your house might have some hidden income potential. An empty spare bedroom, a finished basement, or a garage apartment can be turned into a revenue stream. Renting out part of your home provides a consistent source of extra income that can be directed straight to your mortgage payments. It’s like your house is helping to pay for itself.
Quick Summary:
- Why it’s a good option: It generates passive or semi-passive income using an asset you already own. This new income stream can be substantial enough to make a massive difference in your payoff timeline without altering your primary budget.
- Action: Rent out an unused room, basement, or accessory dwelling unit on your property.
- Benefit: Provides a steady stream of extra income to apply directly to your mortgage.
- Next Step: Research local laws for landlords and tenants, and check platforms like Airbnb or Roomster to gauge rental rates in your area.
6. Start a Side Hustle
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Everyone has a skill, a passion, or just some extra time that can be monetized. Turn your knack for baking, writing, graphic design, or dog walking into a side business. A side hustle provides a dedicated stream of income that exists outside your regular budget, making it easier to funnel that money directly to your mortgage principal without feeling the pinch.
Quick Summary:
- Why it’s a good option: It allows you to accelerate your mortgage payoff without sacrificing your current lifestyle. The income is directly tied to the effort you put in, giving you control over how much extra you can earn and pay down.
- Action: Start a small business or freelance gig based on your skills or hobbies.
- Benefit: Creates a separate income stream specifically for extra mortgage payments.
- Next Step: Brainstorm your marketable skills. Start with small, manageable projects to build momentum and a client base.
7. Downsize Your Home
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Sometimes, the most direct path to being mortgage-free is to get a smaller mortgage. If your current home is larger than you need, selling it and moving to a smaller, less expensive property can dramatically lower or even eliminate your mortgage debt. The equity from your larger home can be used as a substantial down payment on the new one, or it might be enough to buy it outright.
Quick Summary:
- Why it’s a good option: It’s a powerful, one-time move that can instantly solve your mortgage problem. A smaller home also typically comes with lower property taxes, insurance, and utility bills, freeing up even more cash flow.
- Action: Sell your current home and purchase a smaller, more affordable one.
- Benefit: Can significantly reduce or eliminate your mortgage balance in a single transaction.
- Next Step: Analyze the housing market and calculate the potential equity you could gain from selling. Compare that with the cost of smaller homes in your desired area.
8. Make Bi-Weekly Payments
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This is a simple but clever trick. Instead of making one monthly payment, you make half a payment every two weeks. Because there are 52 weeks in a year, this results in 26 half-payments, which equals 13 full monthly payments. That extra payment each year goes directly to the principal and can shave several years off your loan term with minimal effort.
Quick Summary:
- Why it’s a good option: It aligns with many people’s pay schedules and automates the process of making an extra payment each year. The impact is significant over the loan’s life, but the change to your cash flow is barely noticeable.
- Action: Pay half of your mortgage payment every two weeks instead of the full amount once a month.
- Benefit: You naturally make one extra full payment per year, accelerating your payoff.
- Next Step: Check with your lender first. Some offer formal bi-weekly programs, while others may require you to set it up manually to ensure the extra funds are applied correctly.
9. Pay Down Debt Before Buying
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If you haven’t bought a home yet, you’re in a great position. Before taking on a mortgage, focus on reducing or eliminating other debts like car loans, student loans, and credit card balances. A lower debt-to-income ratio makes you a more attractive borrower, potentially qualifying you for a better interest rate. It also frees up your future income, allowing for a larger mortgage payment from day one.
Quick Summary:
- Why it’s a good option: Starting your homeownership journey with a clean financial slate allows you to be more aggressive with your mortgage from the beginning. A better interest rate secured upfront will save you thousands over the life of the loan.
- Action: Reduce or eliminate existing debts before applying for a mortgage.
- Benefit: Improves your borrowing profile, helps secure a lower interest rate, and frees up future cash flow.
- Next Step: List all your debts from the highest interest rate to the lowest and focus on paying them off before you start house hunting.
10. Live on 50% of Your Income
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This is the advanced, black-belt level of budgeting. It involves structuring your life so that all your essential living expenses, including housing, food, and transportation, are covered by just half of your income. The other half is then free to be directed toward aggressive financial goals, such as paying off your mortgage in record time. It’s a disciplined approach that requires serious commitment.
Why it’s a good option: It’s the ultimate accelerator. Committing this much of your income to debt repayment can cut a 30-year mortgage down to a decade or less. It forces extreme efficiency and mindfulness in your spending.
Quick Summary:
- Action: Drastically cut expenses to live on half your income, using the other half for debt.
- Benefit: The fastest way to annihilate your mortgage balance.
- Next Step: This is a major lifestyle change. Start by tracking every penny and building a bare-bones budget to see if it’s feasible.
11. Get a Part-Time Job
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Unlike a side hustle that you build from scratch, a part-time job offers a predictable paycheck and a set schedule. The income might be more modest, but it’s consistent. Taking a weekend or evening job and dedicating every cent of that income to your mortgage can make a surprisingly large impact over a year.
Quick Summary:
- Why it’s a good option: It provides a steady and predictable source of extra income. You don’t have to worry about finding clients or managing a business; you just show up, do the work, and get paid.
- Action: Get a traditional part-time job and dedicate the earnings to your mortgage.
- Benefit: A reliable way to earn extra money specifically for accelerated mortgage payments.
- Next Step: Look for flexible jobs that fit around your primary work schedule, such as retail, food service, or delivery driving.
12. Recast Your Mortgage
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Mortgage recasting is a lesser-known cousin of refinancing. If you make a large lump-sum payment toward your principal, some lenders will allow you to “recast” or “reamortize” your loan. They will recalculate your monthly payments based on the new, lower balance while keeping your existing interest rate and loan term. This lowers your monthly obligation, freeing up cash to make even larger extra payments.
Quick Summary:
- Why it’s a good option: It lowers your required payment without the cost and hassle of a full refinance. This gives you financial flexibility; you can continue paying the old, higher amount to pay it off faster, or you can enjoy the lower payment during tight months.
- Action: After a lump-sum payment, ask your lender to recalculate your monthly payment based on the new, lower balance.
- Benefit: Lowers your required monthly payment, providing flexibility to either pay less or accelerate your payoff even more.
- Next Step: Contact your lender to see if they offer mortgage recasting and what their minimum lump-sum requirement is.
13. Explore Government Programs
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Certain government-backed loan programs are designed to make homeownership more affordable. While often used for purchasing a home, some programs have refinancing options that could help you. For instance, an FHA Streamline Refinance or a VA Interest Rate Reduction Refinance Loan (IRRRL) can help eligible homeowners get a lower interest rate with less paperwork.
Quick Summary:
- Why it’s a good option: These programs are specifically designed to reduce housing costs for borrowers. If you qualify, you could access a lower rate or better terms than you might find on the conventional market, which helps you pay off the loan faster.
- Action: Investigate if you qualify for government-backed refinance programs like those from the FHA or VA.
- Benefit: Can provide access to lower interest rates and simplified refinancing processes.
- Next Step: Visit the websites for the Department of Housing and Urban Development (HUD) and the Department of Veterans Affairs (VA) to check eligibility requirements.
14. Ask for Help from Family
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This path is not for everyone and must be navigated with extreme care. For some, receiving a financial gift or an interest-free loan from family is a viable option. This can provide a significant lump sum to apply to the mortgage. However, it’s critical to treat this transaction with the seriousness of a legal contract to avoid misunderstandings or strained relationships.
Quick Summary:
- Why it’s a good option: It can provide a massive, interest-free boost to your mortgage payoff journey. If a family member is in a position to help and wants to, it can be a loving and impactful gift.
- Action: Accept a gift or a formal loan from family or friends to pay down your mortgage.
- Benefit: Can provide a large, interest-free injection of cash to reduce your principal.
- Next Step: If it’s a loan, draft a formal repayment agreement. If it’s a gift, be clear about the terms (or lack thereof) and express immense gratitude.
Taking Steps to Financial Freedom
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The first step to becoming mortgage-free is deciding that this is a goal you want to pursue. Identify strategies that feel realistic for your situation. Maybe you start by setting up a bi-weekly payment schedule or committing to putting your entire tax refund toward the principal this year.
The key is to begin. By taking control and creating a plan, you can turn the dream of owning your home free and clear into a reality sooner than you ever thought possible.