Question:

How do I pay off my mortgage early?

Answer:

"How do I pay off my mortgage early" is a very common question. Prepaying your mortgage should be allowed by your home loan plan. Most loans allow prepayment of 20% of the original loan principal amount yearly. However, check with your lender if they charge a fee for setting up an early repayment plan.

Most Popular Plans for Paying Off Mortgage Early

  • Biweekly plans are very popular and effective in early mortgage prepayment. The lender and you will have an agreement for you sending in one half of the monthly payment every two weeks. Throughout the year, this accumulates one additional full monthly payment and cuts thousands of interest from your mortgage loan. Biweekly early mortgage payment plans usually involve a setup fee.
  • Annual prepayment is another popular way for prepaying your mortgage. For example, you could make one extra mortgage principal payment whenever you can afford it throughout the year. The larger the payment, the better.
  • If you are unable to set aside one extra payment annually, it is usually possible to send in smaller amounts of cash every month towards the principal.

The three approaches to early mortgage payoff have similar effect when the extra contributed yearly amount is comparable.

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