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  • Writer's pictureMichael Belfor

Should You Pay Your Mortgage Off Early?

The advantages of paying off your mortgage early can be vast. You’ll save money in interest, build equity quicker and pay off your home sooner. These factors equate to extra cash in your pocket, the option to utilize a home improvement loan and debt-free living – at least in terms of your home!

So, let’s see if paying off your mortgage early is the right call for you.


Whether you’ve just received a raise (congratulations!), earned your annual bonus, come into some inheritance money or sold a few strategic investments, some of us will find ourselves with extra money that we want to put to work.


High-interest debt can be a real pocketbook killer. Paying your mortgage off early may be nice, but it can be more strategic to pay down this mounting debt. This is because the interest rate on many debts may be higher than the interest rate on your mortgage.


Aside from impulse purchases, high-interest debt tends to build when we have unforeseen expenses like a medical bill or family emergency. If you’re thinking about paying off your mortgage early, but don’t have a few months’ savings on hand in case of a rainy day, this money may need to stay parked.


Paying off your mortgage early is absolutely an investment in your financial future. However, so is retirement. Make sure you’re able to consistently fund your retirement account before diverting this extra money into your mortgage.


All mortgage lenders – and loans – are different. Check the terms of your loan to ensure you understand whether there is a pre-payment penalty for paying off your mortgage early. This is typically a percentage of your mortgage, so find out exactly how much you may be on the hook for if you opt to pay it off early. Pre-pay penalties are a feature of the past, so depending on when you secured your loan this may or may not apply to you. If it does, this pre-payment could negate all the hard work you did to pay off your mortgage early in the first place!


There are many ways to put your money toward good use. Paying off your mortgage early is just one of them. Though a financial advisor will know best, you should compare the rate of return on other investments that may earn a greater yield over time.

There are endless ways you can use extra money. For some, however, the idea of being debt-free is synonymous with peace of mind. If you’re someone who knows they will sleep easier at night knowing they don’t owe anything on their home, then paying off your mortgage early may be right for you. If you’re nearing retirement or your income will change in the future, this may be right for you.

If you do choose to go this route, there are three methods to paying off your mortgage early.

  1. Lump Sum Payment. Send in an extra payment at any point during the year. Be sure to specify this is a principal-only payment.

  2. Larger Monthly Payment. Make your monthly payments a little larger, and specify that the extra amount should be applied to your principal loan balance.

  3. Bi-Weekly Payment. Divide your monthly payment in half and pay that amount every other week. This will result in an extra mortgage payment by the end of the year. APM’s mortgage calculator can help you determine how you can pay your mortgage off earlier through bi-weekly payments.

Paying off your mortgage early can have many benefits. Not only have you lowered your living expenses exponentially, but you’ve freed up that monthly obligation for other uses. And let’s not forget the emotional reward of knowing you own your home outright!

The journey to paying off your mortgage early can be started at any time that’s best for you. If you feel this is the right option for you, give APM a call today. We’d love to help you achieve your dreams!

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