Paying Off Your Mortgage Faster is a very common dream for those with a mortgage, who doesn’t want their debt gone a bit quicker? Also very common is thinking that it’s a really difficult or even impossible thing to do! If you’re one of those dreamers wondering how to pay off a 30 year mortgage in 15 years, then read on, as we explain how to achieve this in a uniquely simple – and stress free! – way that doesn’t mean having to sacrifice the things you love.
Table of Contents
Should You Pay Off Your Mortgage Faster?
Before we jump in, it’s important to do some quick checks regarding whether paying off your mortgage in 15 years (or just faster in general) is the best financial decision for you, given your unique circumstances. We’ve already covered this in our recent piece Should I Pay Off My Mortgage? so please make sure you take into consideration the points listed there first.
Increase Your Repayments By $200 Per Week
While we’ll cover other ways to pay off a 30 year mortgage in 15 years below, it should be noted that this goal isn’t as insurmountable as most initially believe. At the most basic level, paying off a loan faster means you must increase your repayment amount.
For an average loan amount of $350,000 and a common interest rate of 3%, you can use any online mortgage repayment calculator tool to get our dead simple answer:
Increase your mortgage repayments by $200 per week.
If you’re reading this and want to know just one single, simple thing to do to get the biggest bang for your buck, this is it. Increase your mortgage repayments by $200 per week.
By doing this one, single change you can cut a $350,000 loan at 3% in half. The loan term will go from 30 years down to 15 years and 8 months and you’ll save around $92,000 in interest. There’s no complicated strategies, formulae, maths to do or processes to understand. You’re paying more into your loan, so it will end quicker. Easy.
This quick change has shown to be easily adopted by the vast majority of mortgage holders out there and gets you a huge, immediate win right away. Now $200 a week isn’t anything to sneeze at, but it also isn’t anywhere near as extreme as the Advanced Advice in our piece on How Much Extra Should You Pay On Your Mortgage.
Make Automatic, Extra Repayments Each Month
The best way to implement this extra $200 payment is to make it a regular, automatic, extra repayment each month or fortnight. While we list many other ways below that can help, make no mistake, they pale in comparison to this one. Do. Not. Skip!
The recommended way to do this is to setup an Automatic, Extra Mortgage Payments each time your normal payment comes out. This allows you to not only change the amount quickly and easily in the future, it also makes the process automatic, greatly increasing the likelihood you’ll stick to it throughout the long term.
Don’t be worried if you can’t come up with the full $200 per week extra just yet, you don’t have to set it up with the full amount, it can be $1! Just set it up as quickly as possible and start experiencing the automated process and understanding of how it works.
Quite often, especially with fixed interest loans, your lender or bank might not allow you to make higher or more frequent repayments so it’s good to check with them first. If they do, there could be a limit (for example $10,000 per year) so make sure you’ve confirmed with them that what you’re planning is allowed and that you won’t be penalised
If you’re in the US, you should also make sure to inform your lender that these additional repayments are to be applied to the principal, not interest. If you don’t, the lender can apply them to future scheduled repayments which won’t save you any money.
Have A Goal To Motivate You
It’s common to want to pay off your mortgage on the vague notion that you’d like to be richer or debt free. Common, but dangerous.
The problem with a fuzzy (or non existent) goal is that it’s all too easy to abandon. There is no way to measure success or to keep you on track and this vague “plan” will quickly be forgotten.
Even if you’re paying your mortgage off super quickly, say in 15 years, that’s still 15 years you need to keep up your motivation because without it, there’s sure to be something else to tempt your money away.
This is why having a specific, measurable goal is very important. Here are a few examples:
- To pay the mortgage off before I’m 30 / 35 / 40 / 45…
- To pay the mortgage off before we have children
- To be completely debt free within 15 years
Try and find out WHY you want to pay off your mortgage faster and put that reason in a very visible spot so you never forget it. Make sure it’s clear and on display so you’re regularly reminded about your goal. We recommend putting it in your free Excel Mortgage Calculator Spreadsheet as most people tend to review it regularly. It will also help guide you on what your exact repayments will need to be for your 15 year time frame.
Once you’ve setup your extra mortgage repayments, goal and mortgage planning spreadsheet, you should focus as much time and energy as you can on learning How To Save Money. The more money you save, the more you can add to your extra mortgage repayments creating a debt snowball effect that is extremely powerful.
Even small amounts of income, such as bringing your lunch to work rather than buying it, can make a big impact. Try and focus on the biggest items first. Make a very rough list of your major expenses and then attack them one at a time from biggest to smallest. Once again, our Excel Mortgage Calculator Spreadsheet will help you with this.
Example: If you save $10/day by bringing in lunch, 5 days a week, that $50 a week added to the repayments. On a $300,000 loan at a 3% interest rate will save you $35,512 in interest and over 6 years.
For those who are after an even more advanced approach, we encourage you to push 70% of your wage to your mortgage when considering How Much Extra Should You Pay On Your Mortgage. This is what has allowed many of our readers to pay off their mortgages in well under 15 years.
Refinance Your Mortgage
This can be a huge double win if there are cheaper interest rates available. The best way to do this is not only refinance to the lower interest rate, but to then double up the savings by continuing to still pay the same repayment amount each month / fortnight.
Example: Refinancing from an interest rate of 3% to 2% and keeping the same repayments ($1,686/month) on a $300,000 loan will save you $97,676 in interest and over 4 years.
The other reason this is such a huge benefit is that it’s basically a free lunch! Your mortgage repayments don’t change yet you save a huge amount of time and money.
Use Unexpected Income
If you get any unexpected income such as bonuses, inheritance or tax returns you can throw them directly at your mortgage to help bring it down. For one time income sources it can help to keep 5% to spoil yourself with, while committing the remaining 95% bulk to the loan. This way you get a nice immediate and visible benefit from the income, whilst at the same time making great progress on your mortgage.
Even better is to use unexpected regular income such as money you make from a side hustle or small business. Even something as little as $100 extra earned per week can cut almost a decade off your loan.
Example: Adding just $100 a week of income from a side business to the repayments on a $300,000 loan at a 3% interest rate will save you $58,976 in interest and over 10 years.
It’s important to note that these recommendations aren’t scammy, get rich quick schemes that only work for the people on top or the 0.0001% of people that “make it”.
Getting to pay off a 30 year mortgage in 15 years is a result that can be achieved through specific, repeatable actions which you can do too. The results are achievable for everyone, even if you’re on a single income, even if you’ve got children. Heck, even if you are both those things there are already those out there using this knowledge and getting ahead:
We bought for $370K. We paid it off in 11 years with a single income and 3 kids– Tim
So what are you waiting for? See how much extra you’ll need to pay with the below fortnightly repayments guide, check out more Mortgage Advice and start reaping the Benefits Of A Paid Off House today!
|Loan||30Y Repayment||15Y Repayment|
The benefits include: 1) How to pay off your mortgage faster than 99% of people with one hour a month of work 2) How to get rid of your debt and have the freedom to spend money on the things you love, guilt free 3) Clear outline of how to setup your expenses, mortgage and general finance 4) How offset accounts work and how to get the same result without being gouged by the big banks 5) How to cut through the crap and focus on the things that truly matter when taking down a mortgage 6) How to adjust the strategy so it works for you, even if you have kids, even if you only have one income 7) How to do all of these things and maintain a normal social life (and never be cheap).