How to pay off your mortgage faster

Figures below use a $300,000, 30-year fixed mortgage at 6.5% (payment about $1,896). Run your own numbers in the mortgage payoff calculator.

1. Add a fixed amount to every payment

The simplest method and one of the most powerful. An extra $200 a month on the example loan finishes it about 7 years early and saves roughly $104,000 in interest. Set it up as an automatic "additional principal" amount so you never have to decide again.

2. Make one extra payment a year

A 13th payment each year (from a bonus or tax refund) takes about five and a half years and roughly $84,000 of interest off this loan. It's the same effect as the biweekly payment plan, without the enrollment.

Sending your tax refund to principal each spring? It helps to know where that refund comes from, and ahaboo has a hands-on bracket demo that makes marginal rates finally click.

3. Switch to biweekly payments

Half a payment every two weeks is 26 half-payments, or 13 full payments a year. Only do this through a servicer that applies each half-payment on arrival and charges nothing; skip paid third-party programs.

4. Throw windfalls at principal, early

Inheritances, bonuses, the proceeds of selling a car: a lump sum does the most good at the start of the loan. See how dramatically the timing matters below.

5. Round up

Round $1,896 up to $2,000 and the extra $104 a month cuts about four years. Small, painless, and it compounds.

6. Refinance to a shorter term

A 15-year mortgage usually carries a lower rate than a 30-year and forces the faster pace. The catch is closing costs (often 2–5% of the loan) and a higher required payment with no flexibility. It pays off when rates have fallen or you know you can sustain the payment. Keeping a 30-year loan and paying it like a 15-year gives you the flexibility instead.

7. Recast after a big payment

Recasting lowers the required payment after a lump sum but doesn't shorten the loan by itself. It's a safety valve: pay the lump sum, recast for a lower minimum, then keep paying the old amount voluntarily. Compare both paths in the mortgage recast calculator.

Before you prepay

• Have three to six months of expenses in an emergency fund; equity is hard to get back out.
• Pay off credit cards and other higher-rate debt first (the debt payoff calculator can plan it).
• Take any employer 401(k) match; it's an instant return no mortgage can beat.
• Check for a prepayment penalty on your Closing Disclosure.
• Weigh investing instead with the pay off or invest calculator.