Shaving Off Loan: 4 Effective Ways to Pay Off Your Mortgage Early

by Greg on August 8, 2019

hands exchanging property keys

Purchasing a house is everybody’s dream. However, acquiring one is likely the most expensive asset you’ll ever finance that can take decades or more to pay back. It can become a big problem for you in the long run if you can’t handle it properly.

Moreover, paying your mortgages and interests at the end of the month for 30 long years can affect not just your bottom line, but also your psychological well-being. You can’t think straight and will never have financial freedom if you won’t eliminate your loans as soon as possible.

With that, these four ways will help you manage your debts and pay off your mortgage earlier than you thought.

Switch to Bi-weekly Payment System

Generally, a bi-weekly payment system is simple. Instead of paying your mortgage every month, you’ll be paying half of your monthly amount once every other week. So, since there are 52 weeks in one whole year, you’ll have 26 bi-weekly payment that will result in 13 monthly payment in one year.

With every 13th payment, your loan’s principal balance will get reduced, and that will shorten your mortgage pay off period. For further understanding, you can take a look at this example:

If you have a 30-year mortgage loan of $150,000 at an interest rate of 7%, making the bi-weekly payment would save you interest of almost $ 53,000. This system will also allow you to pay off the loan for almost 6 and a half year earlier.

Apparently, if you have a larger amount of mortgage and higher interest rate, you can receive greater savings in the long run.

Consider an Offset Account

If you want to pay your mortgages earlier than 30 years, consider having an offset account. This account is a transactional savings account connected to your house loan.

When the interest of your house loan is calculated, the principal amount due will be deducted on the balance of your offset account. With this, you can reduce the interest charge and will help you pay off your mortgage faster.

Put Your Windfalls as an Extra Payment for Mortgage

Most of the taxpayers will receive a tax refund each year. So if you’re one of them and you’ll choose to use this money as an extra payment for your mortgage, it will surely make significant progress in getting your home paid off.

Aside from that, you can also use other potential windfalls such as cash gifts from a close friend or relative, a successful garage sale, your bonus from work or inheritance as a lump-sum payment to shave years off your mortgage.

Refinance Your Loan

One way to pay your mortgage earlier than the given period is by refinancing your mortgage loan. This method means replacing your current loan with a new and better one. It may sound another credit, but the options of refinancing your loan can help you in various ways, including:

  • Refinancing to a shorter term usually offers a lower interest rate.
  • Refinancing to a lower rate and making higher payments can reduce your principal amount faster than you thought.
  • Refinancing to clear all your higher-interest debts will allow you to save money from the interests you need to pay for these debts. Then use these savings to speed up your mortgage loan payment.

Moreover, refinancing will allow you to draft up a new loan. With that said, the refinancing options mentioned above can pay off your mortgage loan sooner and will save you thousands of money from your interest.


Mortgages are inevitably one of the biggest household investments of all time. That’s why as much as possible, you need to find a way to pay off your house loans five or ten years earlier.

With that being said, there are things that you can do to make it possible. These include switching your payment terms, owning an offset account, refinancing your loan, or using your bonus as an extra payment for your house loan. Following these ways will help you manage your debts and shave years off your mortgage.


Liezen Anne Inte

Liezen Anne Inte is one of the content specialists of KKC Outsourcing Corporation. She writes different topics related to digital marketing, property preservation services, and social media tactics. When she isn’t working, Liezen loves to play outdoor games such as badminton and volleyball.

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