9 Smart Moves If You Want to Pay Off Your Mortgage Early

These healthy money habits could help you cut costs, save more, and get out of debt early.
Updated Feb. 23, 2024
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According to Experian, the average American has $208,185 in mortgage debt. That’s a figure that may seem impossible to pay off early. But there are money moves you can make in your 30s and beyond that may allow you to achieve an early payoff. And if you’re able to pay off your mortgage ahead of time, you’ll save a significant amount of money in interest.

What’s more, these healthy financial habits can also help you reach your other goals, whether that’s maximizing your retirement savings or taking that dream vacation.

Automate your savings

Financial experts commonly suggest that people who want to maximize their savings should pay themselves first — that means depositing money directly into savings before you have a chance to spend it. The easiest way to do this is to automate deposits into a savings account. But how much should you set aside?

If you get consistent paychecks, you may want to set up an automatic withdrawal for a fixed percentage of your paycheck. But if you work inconsistent hours or have cash flow issues, you may struggle with knowing how much to save. If that’s the case, consider using an app like Digit to take away the guesswork.

Digit takes advantage of machine learning to analyze your spending and upcoming bills and calculate the appropriate amount to set aside in savings or investment accounts for you each day. A membership costs $5 per month, but the average member saves $2,200 per year. There’s also a 30-day trial you can use to determine whether Digit is right for you. Read our full Digit review for more details.

Refinance to a 15-year mortgage

Creditworthy borrowers working with the best mortgage lenders might be able to achieve a lower interest rate from refinancing, as interest rates dropped in 2020 and are still the lowest they’ve been in years. Refinancing to a shorter term will most likely mean a higher monthly payment, but you could also save big money on interest in the long run.

For example, let’s say you’re two years into paying off a $360,000 loan balance on a 30-year fixed rate mortgage with an interest rate of 6%. If you were to refinance at a rate of 3% to a 15-year term, you’d have to pay a few hundred dollars more each month, but you’d save a whopping $111,596 over time and get out of debt 13 years faster. That’s even after a 1.5% origination fee and $1,200 in other closing costs for the refinance.

You don’t necessarily need to go to a bank to refinance your mortgage, either. Figure offers a 15-year fixed mortgage refinance with a 100% online application process, so you could potentially save big from the comfort of your own home. Read our Figure review for more details.

Cut unnecessary costs

Wondering where the extra money will come from to pay off your mortgage debt early? Reevaluating your budget could give you some wiggle room in your mortgage payments and help you cut costs for retirement. Look for areas where you may overspend on things you don’t need. Coffee and happy hour drinks are popular budget-busters, but also look for the categories in your individual budget where trimming costs may be beneficial.

It’s also a good idea to identify any recurring charges for services or subscriptions that you no longer use. If you don’t want to sort through your credit card statements yourself, Rocket Money can help. Not only can the app help to track your subscriptions and cancel the ones you don’t need, but it might also help you get better deals from your cable company, set up a budget, automate your savings, and more. Read our Rocket Money review for more details.

Use cashback apps

If you’re not currently using cashback apps to earn rewards on your everyday purchases, you could be missing out on some extra cash you might put toward extra payments on your mortgage. It’s much easier to scan your receipt or link your credit or debit card to a cashback app than it is to clip coupons, and the savings could be even better. Many cashback apps also have browser extensions that automatically reward you for shopping online.

Ibotta is one of our favorite cashback apps because of its extensive list of retail partners. You could potentially earn cash back in almost any category, from grocery shopping to restaurants and travel. Ibotta has paid out more than $980 million in cash rewards to users. It’s free to sign up, and you could even earn a $20 welcome bonus. Check out our Ibotta review for more information.

Use cashback credit cards

You can stack the savings if you use a cashback credit card along with a cashback app. Depending on your situation, it could be a good idea to have one credit card with a robust earnings rate on everyday purchases and at least one credit card that has a high earnings rate in specific categories. If you spend most of your disposable income at restaurants and coffee shops, for example, you may want to get a card with a high earnings rate on dining. If you grocery shop for a large family, you could get attractive earning rates from a premium cashback credit card like the Blue Cash Preferred® Card from American Express. Read our Amex Blue Cash Preferred review.

Pick up a side hustle in your spare time

The best side hustles allow you to work on demand or choose your own schedule, so you can fit in the extra work on an evening or weekend you don’t have other obligations. And if you pick something interesting or satisfying for you, it might not even feel like work.

For example, if you can’t help but smile when you see a dog (and who would blame you), you could earn money on your own schedule by pet-sitting or dog-walking with Rover. With Rover, you can set your own prices for various pet services, and pet owners can request your services. Rover provides you with customer support and a payment platform, and it takes a 20% service fee for each booking. Read our Rover review for more details.

Make budgeting easier

Budgeting can be tricky and time-consuming if you’re messing with spreadsheets, and although keeping cash in envelopes works well, that’s not the most secure place to keep your cash, nor will it earn any interest. If you think having a clear picture of your finances will make it easier to budget and save, consider using a budgeting app like Simplifi.

Although it may seem counterintuitive to spend $2.99 per month when your goal is to pay off your mortgage early, Simplifi makes it easy to link your bank accounts and set spending limits and savings goals. It’ll even provide insights to help you reach your goals faster. With the ability to keep tabs on your finances, you might spend less and be able to devote more of your income toward mortgage repayment. Read our Simplifi review for more information.

Make extra payments

There are a few ways you can make extra payments: You might budget a little extra money to go toward the principal each month, make a one-time extra payment after a windfall, or save up to make one full extra mortgage payment each year.

For example, let’s say you owe $240,000 on your mortgage and have a 30-year term and a 5% interest rate. Making just an extra $100 payment each month would help you pay off your mortgage four years and five months faster and save you more than $38,000 in interest. Or if you made an additional mortgage payment each year, you’d pay off your mortgage 58 months faster and save more than $42,000 in interest.

Use your tax return wisely

If you get a tax return, consider putting that money toward savings, investing it, or using it to pay off debt. If your goal is to repay your mortgage early, your tax return can help. You can use a portion of it to make an extra payment each year, which will reduce the term of your loan and save you money on interest. The same is true for other windfalls, such as an inheritance or gift. Any lump sum made as an extra payment could help you pay off your mortgage early.

The bottom line

When you’re financially secure and no longer worried about how to get a loan, you can start looking for ways to get out of debt faster, which could help save you money in the long term. If you’re able to pay off your mortgage early, you might choose to put the savings into your retirement account so you’ll be prepared to live a comfortable lifestyle. Or you could free up cash to contribute to your child’s education. No matter your financial goals, saving money on mortgage interest can help you achieve them faster.

Author Details

Lindsay Frankel Lindsay Frankel is a Denver-based freelance writer who specializes in credit cards, travel, budgeting/saving, and shopping. She has been featured in several finance publications, including LendingTree. When she's not writing, you can find her enjoying the great outdoors, playing music, or cuddling with her rescue pup.

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