The Benefits of Paying Off Mortgage Early


Due to the high costs, people rarely think of paying off their mortgage early.

Mortgage payments are usually completed in 30 years as most contracts are set for that long.

That is a long time to hold on a debt, and a constant concern for many homeowners.

Looking at the many benefits early payment provides can help change things for the better.

Mortgage Basics

A mortgage is a loan taken to help buy land or property.

Most contracts run for 25 to 30 years, though there are exceptions. You’ll fulfill regular payments with interest during this period.

For a lot of people, this will be the largest purchase they’ll ever make.

Many people experience being financially stretched thin because of mortgage payments.

Aside from mortgage, you’d also be paying bills, tax, insurance, and other maintenance costs. If you cannot fulfill payments, then your lender has the right to repossess the property.

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Mortgages are usually first processed through a lender such as a bank.

During the application, you will have to fulfill requirements to qualify for the loan. These requirements are to help ensure that you are reliable when doing payments.

There are different types of loans, each with their own set of requirements.

When applying for a mortgage, you are expected to know what you are looking for. Lenders will want this information:

  • Type of mortgage
  • The property you want to buy
  • How much you want to borrow
  • How long before you can repay the loan

Paying Off A Mortgage Early

Mortgages are the most common personal debt in the United States.

Around two-thirds of homeowners had to apply for a mortgage to get the home they want.

If you can afford to do it, removing this large debt can improve your finances and quality of life.

Here are some of the ways early payment can help you.

More Peace

The real estate market can be an unstable environment.

Some of us have experienced several recessions that have affected property prices.

Keeping up with regular mortgage payments while handling a financial crisis is no easy task. You will not be able to tap equity out of your house in these scenarios.

If you have paid off your mortgage, then it is one less thing to worry about.

You won’t have to deal with changing rates due to changes in the market. You can wait for the value of your home to improve and lessen the impact of any financial crisis.

Financial Freedom

Assuming that you’ve cleared all your debt after paying the mortgage, you now possess more financial power.

This freedom will allow you to pursue other ventures that interest you. Living debt free can open a variety of opportunities including:

  • Starting a business
  • Traveling around the world
  • Taking an extended vacation

Reduce Cost Of Interest

Paying a mortgage usually means that you are paying more than just the value of the property.

Lenders make money through interest which is the extra you pay for the money they lend you.

The longer the mortgage, the more interest you have to pay. Paying it early will help you cut a huge part of that.

Take On Other Debts

A mortgage can impact your purchasing power, limiting your options.

Paying it early will give you more money to pay other debts. The extra money can go to college loans, utility bills, credit card payments, and more.

Ways To Pay Off Mortgage Early

Your lender usually accepts extra payments or has extra terms when you are planning to pay off a mortgage early.

Learn their system to avoid having to pay extra because of ignorance. This will also help you get an estimate of how fast you can pay off your home.


It is possible to turn a 30-year mortgage into a 15-year loan with the help of refinancing.

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In doing so, you’ll pay less interest. These lower year mortgages are set at a fixed rate which means you know what you’ll be paying for the rest of its duration.

You can even go lower with loans that turn your 15-year mortgage into a 10-year one.

Extra Payments

Setting up extra payments can shed off years from the mortgage plan.

By making extra month payments each quarter, you can remove 11 years from the mortgage. That saves tens of thousands of dollars that would have gone to interest.

Cut Down Extra Costs

Even small things such as a $100 lunch budget can turn into large savings.

Adding that extra bucks to the payment will mean less fancy lunches, but more money saved from the mortgage.

Even adding $20 a month to your payments can remove a year from the mortgage. In that same token, $100 can take away four to five years.


While this is more drastic, selling your larger property for a smaller one can be an option.

The sale can afford for the new home, or at worst cost you a smaller mortgage. The smaller the mortgage, the quicker you can complete payments.

The Best Time To Pay Off A Mortgage

As you age and go through your life, it becomes more important to be debt free.

At the age of 40, most people have gone through half of their career.

At that time, having a mortgage and any other debt becomes a little more concerning. Especially when you want to start planning for something like retirement.

Real estate is a huge investment, especially with many areas increasing in value. Yet, we still see people getting into retirement with mortgages payments needing completion.

In 2010, 70% of 56 to 61 year-old Americans were still in debt. Experts advise that the sooner you become free of debt the better.

After all, being debt-free means more power to pursue the things you want to pursue. If you are still working through payments, then age 40 should be your target to clear everything.

Saving Money or Paying Mortgage?

There’s always the question of whether saving money is better than paying the extra for a mortgage.

The question will always be ultimately answered by the interest rate.

There are very few people who can save more money that can offset how much an interest will cost them.

More often than not, paying the extra will mean more money saved in the long run.

This is because when you overpay, you don’t pay the interest on the overpayment. All of it goes straight to the loan, which means that the interest will get reduced significantly.

Of course, you will need to consider your lenders rules. Some punish those trying to overpay at the wrong time.

All in all, the benefits of paying off a mortgage early outweigh the negatives. Consider these tips and try to apply them to your payment planning.

Learn more about mortgage payments at Sprint Funding.