How to Pay Off a 30 Year Mortgage in 15 Years [6 Easy Steps]

Houses are expensive. They cost so much that we have to break the payments down into smaller chunks to keep them manageable.

Typically, 30 years is an average amount of time to pay off a mortgage. But what if you don’t want to be “normal”?

What if you want to own your house free and clear in half the time? You can, using these techniques for how to pay off a 30-year mortgage in 15 years.

First, you need to learn about the subject so you can succeed. You’ll learn about everything from extra payments to terms you should know about mortgages.

The more you understand about house payments, the better off you’ll be, and the easier it will become to remove this debt from your life quickly. 

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house on stacks on thousands of dollars saved from paying off early with piggy bank in background

1. Research Benefits to Refinancing to a 15 Year Mortgage

There are some great things about refinancing. And it’s one of the critical factors for how to pay off a 30-year mortgage in 15 years.

You may be wary of the term because it basically means you are starting your mortgage over. However, if you’re refinancing from a 30 year to a 15 year, you will still save yourself years of payments. 

There are exceptions to this. If you are twenty years into your mortgage, refinancing to a 15-year loan will not make sense because you’ve already paid off a significant portion of your home.

But if you are only a couple of years into your mortgage, it may be a good idea. You need to look at your particular situation to decide if refinancing is an option. 

Two possible benefits of refinancing are a potentially lower interest rate and getting rid of a large payment if you’ve since paid off a lot of the principal.

Grab this free home buying guide & financial dashboard to help you understand how the home-buying process will affect your money long-term.

Possible Lower Interest Rate

This is a big reason for refinancing. Interest payments are enormous, especially at the beginning of your house loan. If you can lower the interest rate, you’ll not only pay off your home faster, you’ll also pay less overall. 

The mortgage rates in the 1990s were typically between 9 and 6.5%. Rates have dropped significantly since then, and it’s easy to pay less in interest.

However, house prices are also high currently, which can mean that you still pay quite a bit.

Check out what type of interest rate you can get if you refinance. This will be very unique to you because many things, like your credit score, influence it.

Suppose you can get a lower rate than you had previously, and you aren’t far into your mortgage payoff. In that case, you can potentially save some money. 

In order to determine whether refinancing makes financial sense, the monthly savings that the new interest rate will give you. Then divide the refinancing closing costs by the monthly savings.

This will tell you how many months at the new interest rate it’ll take for you to break even. Any savings after that will be true savings from the refinancing.

For example, if your refinancing costs are $4,000 and the new interest rate saves you $200 a month, it’ll take 20 months for you to break even. If you plan on selling your home before then, you’ll end up losing money on the refinance.

Get Rid of Debt and a Large Payment

Another great benefit of refinancing is getting rid of debt faster and doing away with that large house payment for good. Refinancing can get you there quicker, and once you no longer have this payment, your expenses will be a lot lower. 

If interest rates are only slightly lower than what you have now, you don’t need to refinance from a 30-year mortgage to a 15-year mortgage in order to pay your home off quicker. You’re able to make extra payments towards your mortgage principal at any time you’d like.

So you can keep your 30-year mortgage. Just double up the payments to pay it off like a 15-year mortgage.

2. Pay Extra Monthly

This is an easy way to pay off your loan faster. It doesn’t require all the paperwork and time of refinancing, and yet it will do the job of helping you reach your goal.

The larger the amounts of money you add to your payment each month, the better. And who knows that you won’t be able to pay it off in even less than 15 years?

Here’s something to remember, though: You’d think that you could just add more money to your mortgage payment and call it good, right? Wrong.

Doing this can result in the bank just paying off more of the interest rather than applying it directly to your loan. You don’t want this because you could be paying off money unnecessarily.

To fix this, make sure your bank knows to apply payments directly to the principal, not the interest.

A phone call will usually work. Some lenders have an online feature that lets you choose the principal with extra payments. 

Use a Payoff Mortgage Calculator to Calculate How Much Extra is Needed

A payoff mortgage calculator will simplify the process of how to pay off a 30-year mortgage in 15 years. It considers things like the number of years on your loan, the amount you bought your home for, and your interest rate.

To simplify, I recommend this calculator from Ramsey Solutions

Extra Payments Early in Mortgage Term are Most Effective 

The earlier you start making extra mortgage payments the better. You pay a lot more interest at the beginning of your loan.

If you wait until later, you can still pay off the mortgage early, but you’ll end up paying more interest than if you start sooner. 

Related: Paying Extra Towards Your Mortgage Principal Saves More Than You Think

3. Make Bi-Weekly Payments

This is a relatively small change that makes a significant impact. When you make one monthly payment, you make 12 payments per year.

But with bi-weekly payments, you actually make a couple of extra payments each year, meaning you pay more towards your mortgage. You likely won’t notice it too much, but it can help you pay off your mortgage years earlier. 

This may also make it feel like you’re paying less because the amounts you owe at one time will be smaller. You’re actually paying more, but it can trick your brain into thinking your mortgage doesn’t cost quite as much, which is a benefit.

4. Make One Large Yearly Payment

If you prefer, you can skip the bi-weekly payments and make one sizeable yearly payment to help pay down your mortgage. This could be the equivalent of the extra money you’d pay with bi-weekly payments, or you can even do more.

You might find that you can pay the equivalent of two additional payments or more. The more you pay each year, the faster you remove your mortgage from your life.

There are lots of ways to do this. If you get an annual bonus from your job, or you receive money for birthdays or holidays, you can easily apply this extra cash to your mortgage without it disrupting your daily life.

You can also choose to create a savings account where you drop extra money throughout the year when you get a chance. A few dollars here and there won’t be that significant to you, but by the year’s end, you may find that it adds up to a large extra house payment.

5. Make Sure to Designate Any Extra Payments Properly

All of this extra money can really make a difference and help you become debt-free sooner. But suppose you are adding money to your payments without properly designating where they should go. In that case, it can end up not lowering your mortgage in the correct way. 

Every month you make your mortgage payments. But there are many things wrapped up in there, like your principal amount, interest, sometimes PMI, and other things. You need to make sure extra amounts are applied to the principal, not the interest.

Otherwise, you’re paying unnecessary extra. While your loan amount is fixed, interest is not. It goes away when you pay off the loan. So there’s no reason to pay more than necessary with that. 

Name, Address, and Account Number are Included

Don’t forget to include your basic information such as name, address, and account number when making extra payments. That way, there’s no confusion about who’s account it is and where your extra money should go.

Designate as “Principal Payment”

This is very important! Whether you choose to write a check for your mortgage or you make automatic monthly payments, you need to designate that the extra amount is for the principal.

That way, all of your extra money is going to help you pay off your home quicker. 

6. Check Terms of Your Mortgage

Every bank and loan has its own specific requirements. Before you begin early mortgage payoff, you need to check the terms of your mortgage and find out how they handle these things.

This will save you from dealing with headaches later after you’ve tried to make payments.

Will They Accept Partial Payments?

There is sometimes confusion with this. You need to talk with your lender to see what their rules are about partial payments.

Some lenders have “suspense accounts” where they hold extra funds they’ve received for the mortgage. 

It’s best to talk directly with your lender, so you know what to do. Before applying any extra money, know where it will go.

Is There an Early Payment Penalty?

What? A penalty for early payments? Yes, you read that correctly.

Sometimes lenders will actually charge you for extra payments on your mortgage. This isn’t always the case, but you need to know what will happen with your specific mortgage.

There are laws about prepayment penalties, though. They cannot always be charged, and there are restrictions.

Find out all you can about your loan and lender to know what penalties you could face or if there will not be any.


Why Pay Off Your Mortgage Early

It’s good to know how to pay off a 30-year mortgage in 15 years, but why would you want to do this? Sure, it saves money, but for what purpose? I’ll talk now about the benefits of early home payoff.

Lower Monthly Expenses

Since mortgages are usually a big chunk of the monthly finances, how would you like to not have that?

It should significantly lower your expenses each month. What can you do with that money? A ton of things.

You might travel the world with the money you save each month. Maybe you further your education through college or grad school. You could also simply add more spending money to your budget. 

There are so many fun things to do when such a large payment is removed from your life. Plus, it can free you up from needing to make as high of an income.

Lower expenses can bring immense freedom and help you pursue a career that you love, prioritizing that over more money.

Build Wealth

You can build wealth when you don’t have a mortgage payment. You might choose to add a lot more money to investments each year.

Imagine adding all the money that would typically go to a mortgage to your investments instead. That’s potentially thousands a year!

You could also save up cash for a big purchase with a great return, like an investment property or land. These purchases take a good chunk of money that you can save much faster when you don’t have to pay for a home.

Or what if you decided to sell your house in a few years for more than you bought it for? Since houses tend to appreciate in value, you might find that the amount you paid years ago is much smaller than what the home is worth now.

You could sell it and maybe even retire off the extra money. These ideas are good ways to build wealth, and they start with not having a mortgage.

Related: 11 Wealth Building Habits To Start Now

Contribute More to Retirement

Your years after working will be a lot more fun with more cash. If you haven’t maxed out your retirement accounts in the past, now is the time.

With no mortgage, you can easily contribute some of the extra to IRAs and other retirement vehicles. These have limits, but if you find it’s easy to max them out with no mortgage to pay for, you can always add to your other investments as well.

To Make More Rental Income

If you rent out part of your home or rent the whole thing as a rental property, you no longer need to use those funds to pay off the mortgage. Instead, all of that rental income can become part of your monthly budget or go directly to your savings and investments.

The area you reside in has a lot to do with this, but you’re probably looking at anywhere from $500 extra a month to $4000 or much more. This will all be determined by location, average rent costs, and how much of your home you rent out.

You might even try AirBnB if you live in an area that tourists tend to visit often. There’s a lot of money in rental income to be made, and while you can start this before your home is paid off, you keep more of that money if none of it is needed to pay a mortgage.

How to Come Up With the Money to Pay Off Your Mortgage Early

Here are a few tips for coming up with extra money. It’s not an all-inclusive list but can give you an idea of where to start.

Start a Side Job

With even a couple hundred extra bucks, you can start to pay off your mortgage faster. A side income can easily afford you what you need to cut your mortgage time in half.

There are so many passive income resources out there. You can start your own business, sell furniture or books online, or do any number of other side jobs.

After you decide on a side hustle, think about how much of it you can use for paying off your home. The great thing about side jobs is you can usually decide how much you want to make based on time and effort.

To pay off your home faster, just work more. Use everything you can to pay off your home.

Related: Apps That Pay You Money From Your Phone

Rent Out Part of Your Home

You might consider allowing a renter to live in a room in your home, or even a whole floor if you have space; this is one way to make enough for extra mortgage payments.

You can simply apply all the extra you gather from rental income towards your house payment, enabling you to reach your goal of 15 years as opposed to 30. 

Tighten Up Your Budget

You can combine this technique with other ways of paying off your mortgage, or you can just do this. If there is any extra room in your budget where you are spending on things you don’t really need, consider spending less in order to pay off your mortgage. 

Think about lifestyle for this. What if you didn’t go to restaurants and started buying groceries for lower prices? Maybe you can get rid of some subscriptions or stop online shopping.

A lot of people find they can save at least a couple hundred dollars a month by tightening their budget, and all that money pays off your home quicker.

Related: Most Effective Budgeting Strategies

It is Possible to Pay Off Your Mortgage in 15 Years Instead of 30

While it might seem impossible when you first look at it, paying off a mortgage in half the time is very doable. With some knowledge and hard work, you can easily do this for your own home.

While it won’t be easy, if you’re willing to take on part-time jobs, tighten your budget, and apply other savings techniques to your life, you can become a person who owns their home outright. 

Now you know how to pay off a 30-year mortgage in 15 years. The best thing about owning your home is the freedom you have.

Your expenses are lower, you can save more money, and you may even find that you feel less stressed about finances.

Owning your home is something to strive for, and the sooner you accomplish this, the better. It’s something people look forward to accomplishing, and it can save you from having to pay more interest than you need to. 

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Steffa Mantilla

Certified Financial Education Instructor

Steffa is a Certified Financial Education Instructor (CFEI) and the founder behind Money Tamer. Her 12-year background in operant conditioning and positive behavioral change training is used to help people find effective motivators to change their harmful money behaviors. Steffa explains the reasons “why” behind people’s financial behaviors and how to successfully change them. After paying off over $80,000 in debt through budgeting, she now teaches families how to get their own finances in order. You can learn more about her here.

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