How Can I Pay Off My Mortgage in Five Years?

It’s a question that’s only asked by the brave. Considering most houses take between 15 and 30 years to pay for, five years is an incredibly brief period.

It is possible to pay off a mortgage in five years, but it does require a lot of focused effort. You may find that your lifestyle changes quite a bit, but you definitely won’t regret it.

Your mortgage can be paid off in many different ways. There are a lot of creative approaches, but I’ve added some of the best ones here.

You’ll learn what works, what doesn’t, and how to pay off a mortgage in five years with confidence. Here’s how to get started.

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1. Refinance

Refinancing your home means you get a new loan rather than your old one. It usually comes with benefits, but remember that your loan starts over when you refinance.

So it isn’t ideal if you’re several years into your current one or you will end up with more years on your mortgage loan than you had originally.

Shorter-term

Refinancing can help you to switch over to a loan with a shorter time frame. For example, a twenty-year loan could become a fifteen.

That also means more money goes toward your actual house payoff instead of interest to the bank.

This is the perfect way to start paying off your mortgage early. Although refinancing is an excellent step to take, it isn’t the only thing you’ll need to do.

If you already have a 30-year loan, you can pay it off in 5 years by putting extra money towards the principal every month. Speak with your financial advisor to see whether it makes sense to refinance or simply pay extra money.

Related: What effect does paying extra on your mortgage have?

Lower interest rate

 One of the ways that you can pay off a mortgage in five years is to refinance. This may be a good idea if you can lock in a significantly lower interest rate.

It means your monthly payments will be lower, leaving you more cash for the principal. It’s all about finding ways to pay less money to the lender and more on your actual home debt.

Since you won’t be keeping your mortgage for the total amount of time anyway, the focus of refinancing is not to pay it off in just less than 30 years, but instead 5. Consider these other ideas to pay off that loan faster.

2. Biweekly payments

Rather than making one big mortgage payment a month, you can switch to paying more often. You’ll end up with more than twelve payments a year, so you’re paying off a bit more annually than you would be with a monthly payment.

This is a simple technique for making payments more manageable. It may feel like you’re paying less, but it’s actually more in the long run.  

3. Buy a home you can afford

This is something to think about before you purchase your home. If you are still in the market and haven’t bought yet, buy a home you can afford.

However, what the lenders tell you and what you’ll want to pay for a house could be very different amounts. When shopping, look for a home that you like but also something that isn’t too expensive.

A common rule is to stay around 28% of your before-tax income. However, if you go too far above this, it may be difficult to make payments at all, let alone pay off a mortgage in five years.

If you’ve already purchased your home and it’s more expensive than you would’ve liked, don’t worry. You can still pay off a mortgage in five years!

You may have to work harder, especially if your house payment is substantial, but it will all be worth it when you no longer owe any money for your home. 

4. Hold off on home renovations

After buying a house, especially if it’s not brand new, many people want to renovate. While this can potentially increase value and make your home more personalized, it’s good to stick with one big goal at a time.

In order to pay off a mortgage in five years, it’s essential to give all of your extra money and attention to this. Then, after you’ve paid off the house, it will be easy to save up for renovations and other big home projects.

This obviously applies to any other significant money goals, as well. Rather than trying to pay for several big things at once, stick with one for the best results. 

5. Set your goal date

Setting a date for your last mortgage payment is essential because it helps you calculate how much you need to pay off each year and month.

Without an end date in mind, how will you know if you succeeded? Setting a date will help you achieve your goals.

Something that may help you is a yearly calendar. You can add payments to it to keep track as you go.

You might try celebrating each year that you pay off more as a milestone. While it is hard work to pay off a home, it doesn’t mean you shouldn’t have any fun along the way.

You can also try some visual tracking systems for house payoff. A chart you can fill in with a bit of the principal gone each month, or something similar.

This reminder will keep you focused and stop discouragement. It’s great to see your progress add up over time.

You might even mention to a trusted friend or mentor your goal date. That way, they can help you stay motivated and ask you how things are going—having someone else on the journey with you can make home payoff easier.

Five years is a very short amount of time to pay off a home, but it can feel like a long time in your daily life. That’s why staying motivated with a goal date matters so much.

6. Use a mortgage payoff calculator to calculate monthly payments to reach your goal

The exact amount you owe on your mortgage can be complicated, so it’s best to use a mortgage calculator to help. You can find one here or use a different one you find somewhere else if you prefer.

A mortgage calculator will help you take into account everything – including the amounts you’ll pay in interest, as well as the principal amount. It’s a great way to get perspective on your mortgage.

With a mortgage payoff calculator, you’ll also get exact amounts for things, rather than just an average or vague idea of what you owe. It can save you headaches and help you come to terms with the reality of the amount owed.

In addition, this will make your motivation stronger.

7. Make your budget

Paying off debts is rarely possible without a budget. To give yourself a plan, it’s crucial to organize your money. Your budget is your most important tool for accomplishing your home payoff.

So, how do you do it?

What to factor into your budget

You’ll want to make your budget the way you usually would with expenses and savings. You’ll likely want to save still and invest in addition to paying off your mortgage, although you may be putting less money in those categories than usual.

Related: Easy Tips for Starting a Budget

It’s important that while you add a lot of money to the home payoff section of your budget, you don’t forget about everyday life. You’ll still have many expenses to pay for like groceries, phone bills, and utilities.

You may choose to skip the grand vacations or pricey dinners out for now, but be sure to take care of your basic needs before putting more money towards your home.

After you do your regular budget expenses, see what you have leftover to add to your mortgage payment. If it isn’t as much as you’d like, you can try these ideas.

Cut expenses in other areas

Cutting expenses can be beneficial when paying off a mortgage. While it might seem like saving a bit of money won’t do much good, it adds up over time.

Try these suggestions to save more money.

  • Switch to just one tv subscription. You don’t need to get rid of all entertainment, but there’s probably one tv service you use more than others. Choose to keep the one you use the most and cancel the others for a while.
  • Try to lower your phone and internet bills. Even if you think there’s no way to reduce them, it never hurts to call and ask what’s available. Make sure you don’t overpay, and you have the very best possible plan for you that’s also the cheapest. Here are some ways to get free internet.
  • Cut out restaurants. It may help to cut out restaurants entirely to save money. Or, if that’s too extreme, you could take it down to once a week or once a month. Food is expensive, and eating at home doesn’t have to be time-consuming.
  • Stop shopping for non-essentials. If you don’t need something, don’t buy it. Instead of shopping online aimlessly, make a list and only purchase what’s necessary for the time being. 
  • Don’t grocery shop without a list. If you buy groceries with only a vague idea of what you need, you’ll likely purchase many unnecessary items. Shop with a list to avoid this, and keep a calculator handy so you know how much everything will cost. Here is a list of the cheapest groceries to buy. Also, see if you’re budgeting the right amount for food. Many people overspend significantly in this area.
  • Use what you have. Don’t buy new things for the time being if you can use what you already have. Usually, you won’t need new clothes, a new car, or new shoes that frequently. If it still works, save money for your house by making do. To really save, try some of these tips for living without money.

Sell things

You probably have some stuff you don’t use. Instead of just leaving it to sit in your house, you can make some extra money for your mortgage. For example, if you sell home items and clothing, you might make several hundred.

But if you’re willing to think bigger, like putting a second car or unused appliance up for sale, it can add a few thousand to your goal.

Earn more money

This is what will probably help you the most with paying off your home quickly. Earn more!

You can do this by working extra hours, getting a raise at work, or starting a side hustle.

Remember that if you don’t have to use any extra income for expenses, you can put all of it towards paying off your home early. That could add up to thousands a year.

  • Get a promotion or make more at work. Look for opportunities to work more hours or to step up to lead a project. Show that you’re responsible and dedicated, and ask for what you deserve based on the value you provide for the company. You can also fill a need in the business that is necessary but hasn’t been addressed. When you do this, you may find you work more hours or get a promotion.
  • Side hustles are a great way to make money because you can usually do them from home or in a different setting than the office. You might try computer maintenance, cutting grass, painting houses, or anything that will make you some extra money each month. Take on as much work as you reasonably can each week to get rid of your mortgage sooner. If you’d like to work at home, proofreading jobs and online tutoring are great options for earning extra money, even for beginners.

Avoid doing these things to pay off a mortgage early

Even though you have a huge financial goal ahead of you, there are other important things you should remember as you work towards this. For example, although paying off your home is a huge thing, it isn’t the only money goal you should have.

Not contributing to retirement

It’s easy to put off retirement savings while you pay for your home, but this is a mistake.

Retirement contributions grow the longer they have to collect compound interest. That means that the sooner you contribute, the better. 

While retirement savings should grow over time, your mortgage is something you’re already paying off. You just want to pay for it faster, which is great but remember the other things that matter financially.

While you may choose not to put as much as you would without a mortgage into retirement, it’s important to still save a good percentage of your income, whatever that is for you. 

Your financial planner can run scenarios so you can see the difference in your retirement savings over time based on how much you’re contributing. Then you can make an educated decision based on what works best for you.

Not having enough savings

It’s no use paying off your mortgage if you don’t have enough savings.

Why? Because if you have an emergency that sets you back, and you don’t have savings, that will leave you with more debt to pay off. 

It’s a good idea to save up an emergency fund, at least, before you commit to paying off your home in five years. That way, you protect yourself from further debt, which would move your payoff timeline further away.

Related: Is a bigger emergency fund always better?

Paying off mortgage before paying off other high-interest debt

It’s admirable to pay off your mortgage, but pay off high-interest debt first. That way, you aren’t collecting more and more interest on it, resulting in higher payments.

While interest can pile up for your mortgage, it isn’t the same as high-interest debt.

Work your way as quickly as possible through the high-interest debt before beginning to chip away at your mortgage. If it helps, you can make a payoff date for this debt, too, so you can move on as quickly as possible.

Spending all your time on mortgage payoff

While it is a worthy goal, it’s essential not to neglect other areas of your life as you pay off a mortgage in 5 years. You don’t want to forget about family and friends because you are constantly working. Instead, seek balance in your life.

Not making a real plan

If you don’t take the time to outline precise amounts you want to pay off by specific dates, you may be holding yourself back from early home payoff. Having a dream is great, but better than that is being organized about how you will get there. 

Set your goal, as I mentioned earlier, and keep yourself accountable. Stay on track, and don’t let disorganization throw you off course.

You can pay off your mortgage in 5 years

When you finally achieve your goal, remember that you now have the opportunity never to have a mortgage again.

It’s a unique situation, and it’s a great one! So remember the value of owning your home, and don’t go back into debt.

This is a big commitment, and a mortgage is a huge debt that many would love to pay off. It’s entirely possible to pay off a mortgage in five years.

It takes hard work and patience, but it’s definitely something that can work out with the right planning and lots of determination. You can do this, and you’ll likely succeed if you don’t give up and make an actionable plan laying out the steps.

Something to think about is what life will be like without a mortgage. You’ll be able to afford to do many things.

Many of your savings goals can become a reality sooner. You’ll also pay less for bills each month. Remember to keep that no mortgage lifestyle in your head as you progress.

This guide will help you pay off a mortgage in five years. Follow the basic principles of refinancing, saving money, and other techniques, and you’ll soon be able to make this happen.

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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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