3 Strategies for Paying Down a Loan Faster

Many people like the idea of paying off their mortgage sooner rather than later. Others are determined to reduce the amount of interest they pay over the life of a loan.

If these ideas appeal to you, you may want to consider a faster pay down of your mortgage. Here are a few strategies for paying down a mortgage 1,2.


  1. Pay a little extra each month. Generally, any money sent to a lender that is more than the regular monthly payment amount due is applied to the loan’s principal and reduces the balance of the loan. (The account must be current; extra money would first be applied to missed payments and late fees if it is not current.)
  2. Biweekly mortgage payments, aka the 13-month plan. There are 26 weeks in a year. Setting up a plan with a lender to make mortgage payments every two weeks, instead of every month, means the borrower is making 13 payments in a year, instead of 12.
  3. Make a lump sum payment. People who win cash prizes, inherit money, or receive a sizable one-time payment for any other reason may want to use the funds to pay down a mortgage.


In all cases, it’s a good idea to communicate with your lender so that there is no confusion.

Borrowers making an extra payment should request that the extra payment is applied to the principal of the loan, rather than be applied to regular monthly payments due in the future.  It’s also important to check to make sure there is no penalty for making prepayments on your mortgage.

A faster mortgage pay down is not for everyone.  Because the interest paid on a mortgage is typically tax deductible, a faster pay down can impact a borrower’s income taxes. Also, the money used to pay down a mortgage may or may not be the best use of the money. For example, paying down 16% APR interest on credit cards may be a wiser than paying down a mortgage at 4.5% APR.

Before putting any strategies into practice, it’s a good idea to consult with your tax professional and/or financial advisor.

Another strategy that may be worth considering is refinancing an existing a 30-year loan to a 15-year loan 3.  The wisdom of pursuing this option is highly dependent on unique circumstances. It may or may not make sense for you. A Stearns Mortgage Loan Originator can discuss your existing loan, your personal finances and present refinancing scenarios, when appropriate.


Source material:

  1. Prepay your mortgage to save money and time. Holden Lewis. Updated 2 June 2015. Web. 1 Feb. 2016.
  2. How to pay off a mortgage more quickly. Marcie Geffner. 11 Apr. 2012. Web. 1 Feb. 2016.
  3. 4 Simple Strategies to Shave Years Off Your Mortgage. Zillow Group. 17 Feb. 2015. Web. 1 Feb. 2016.

- Apr 24, 2020