How you can pay off your mortgage early

by | Aug 23, 2018 | Home

Paying off your mortgage ahead of schedule can really cut down on the overall cost of your home.

The faster you pay it off, the less you’ll pay in total because you can cut down on interest charges. Plus, you can then start putting away funds toward retirement or other goals sooner. However, coming up with more money can be a challenge. Here are some of your options.

Shorten the term

Mortgages are negotiated over a set term, often 25 years by default. However, you can approach your mortgage broker to repay it faster if funds are available. The following topics are related to increasing income, but if funding isn’t your main challenge, then you can make a lump-sum down payment to reduce your mortgage or reduce the overall payment term and make larger payments as you go.

Climb the ranks

It’s common sense, but if your income increases, then you can allocate more of it to paying off your mortgage faster. A raise or promotion can give you a nice boost along the way. This may not be a viable approach for everyone, but it’s more worth exploring than you think. Asking for a raise or an opportunity to advance in your career is one of the first steps toward making it happen.

Add income streams

There are various ways to create a side income. You could add a second or side job. The sharing economy and rise in gig workers provides a variety of ways to bring in some extra money. Monetising real estate, vehicles or other assets may be an option. Providing a professional service or producing a product in small scale are alternative approaches.

This could also include one-time or occasional funds from other sources. Refunds or bonuses, financial gifts or reclaimed funds can be placed against the total mortgage amount. Keep an eye out for unusual sources – you could be surprised. For instance, many financial institutions overcharged or falsely charged payment protection insurance (PPI) on accounts, and if you were affected, then you could be eligible to claim repayment. The PPI deadline for claims is approaching, so be sure to check your eligibility before the opportunity closes.


This won’t be the right move for everyone, but one obvious way to pay off your mortgage early is to sell the property and, presumably, reallocate or reinvest those funds. This might be effective if the value of your property has appreciated through market shifts or intentional renovation, upgrades or other efforts, and you’ll be purchasing a more modest property or one in a more affordable area.

Reduce expenses

This is likely to be the path forward for most. Review your expenses, cut them where possible and reallocate funds from your budget toward your mortgage. Start by making a list of regular expenses by category. Go back at least a year to get a clear picture. Comparing categories often reveals opportunities to cut back. If you’re serious about paying off your mortgage early, then you should take a hard look at what expense categories and what specific recurring expenses it might be possible to cut back on.

Subscription services are common at the moment, and can be major culprits in bloated expense lines. Are there subscriptions that you don’t use as much as you thought you would, forgot to cancel, or could do without entirely?

Are there opportunities to cut back as a household by sharing more and consuming less? Are there luxuries that could be trimmed or essential costs that could be shifted to more affordable alternatives? You might actually need to make an initial investment to achieve efficiencies over time, such as improving weather-proofing or switching to renewable resources. Changing utility providers, lowering heat and water use, and installing energy-efficient bulbs and appliances can offer savings, as can improving insulation, windows and doors.

Simply being aware of spending can make a big difference. Financial mindfulness emphasises long-term goals over short-term pleasures. Some people use strategies such as setting “no shopping” days to cut back on small, continuous expenses over time, or engage in micro-saving practices where they put aside a small sum every time they make a purchase or indulge in spending to increase overall savings.

Financial advice for paying off your mortgage early varies, but sources generally agree as to the wisdom of paying it off as soon as possible. If you have the funds available, then contact your mortgage broker to either make a lump-sum payment against your total mortgage, or to shorten the repayment term and increase the value of each payment. If funding is a challenge, then pursue additional sources of income and/or focus on reducing expenses to free up funds.

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