How to Pay Off a Home Loan Early

Paying off your mortgage early can help you feel more financially secure.

Paying off your mortgage early can help you feel more financially secure.

In a world of foreclosures and underwater mortgages, having a home loan hanging over your head can be scary. Many people consider paying off their home loans early to get out of debt, but consider your full financial situation before you start putting more money toward your loan. Sometimes this money is better spent on retirement savings or paying off high-interest debts.

Read over your contract and determine if there's an early payment penalty. If the early payment penalty is significant, you might end up paying more to the mortgage company than you would otherwise be paying in interest. Decide whether being out of debt is worth paying penalties. Not all home loans have early payment penalties, but if yours does, the terms will be written in your contract.

Make a lump sum payment if you can afford it. Even if the lump sum doesn't pay down your mortgage completely, it reduces the amount of interest you owe. If you ever need to refinance because you can't make monthly payments, this lump sum payment can also reduce your monthly payments.

Make a budget to help you decide how much you can afford to pay per month toward your mortgage. Then split these monthly payments into two payments that you pay before the monthly due date. This slightly decreases the amount of interest you pay in a year and can help you pay your mortgage off earlier, particularly if you're paying more than the minimum payment per month.


  • Keep a record of all payments made to your mortgage company, the date the checks were deposited and the running tally of the amount due on your mortgage.

About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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