In too many developed countries, people are drowning in debt. Separate from student loans, credit cards and lines of credit, mortgages are among the largest loans for most consumers. In a number of countries mortgage debt reached its highest recorded levels, and continues to increase year after year.

Debt is often unavoidable, particularly when it comes to buying somewhere to live. However it makes sense to have a goal to eliminate debt, and to take the necessary steps to help make that goal become a reality. No one wants to enter their twilight years with a large mortgage.

In order to put yourself on the path to paying off your mortgage faster and staying out of debt in the future, consider the following suggestions.

  1. Know your loan

Every borrower should be intimately familiar with the terms and conditions of their loan(s). Study your loan documents to know the amount of the loan, the interest rate and duration. Know your monthly payment and the remaining balance on your mortgage, as well as any conditions that may allow (or preclude) the ability to make additional lump sum repayments, establish a loan offset account, or to settle the loan before the full term expires. The first step in solving any problem is to get informed, so make sure you know the details of your situation.

  1. Study changes in the market

Keep a close eye on interest rate movements and monitor your lender to ensure you receive the best possible rate. For example, if interest rates fall by more than 0.5%, speak with your lender about negotiating a better deal. This can help lower your repayments, which can help you to pay off your mortgage off sooner when combined with other steps.

  1. Pay more than you need to

Of all the tips to help pay off your mortgage ahead of schedule, this step is absolutely key. Once you know how much you need to pay every month, and have taken any steps you can to make that number as low as possible, be sure that the amount you pay is higher than what’s required. Whereas your typical monthly payment is split between your mortgage balance and interest, any additional funds that you’re able to pay each month count directly against the balance of your loan. The refinancing tip outlined in Step 2 can make it easier to pay your mortgage but, more importantly, allow you to pay more than you need to each month so you can pay the loan down faster. For more information, read A Mortgage Tale and spend some time with this mortgage overpayment calculator.

  1. Increase the frequency of your repayments

Most loans come with repayments that are due on a monthly basis. However if you switch to fortnightly or even weekly repayments you can reduce the amount of interest payable and this can help you to pay off your mortgage sooner.

  1. Minimize your budget over time

For a few months, try cutting back on luxuries such as entertainment, drinks or meals out. See what kind of impact this can have on your cash flow. If there are large purchases that you’ve been contemplating, try holding off. Put that money toward your mortgage instead. If you’re able to get your credit card debt or other obligations paid off, keep setting aside the money each month that would’ve gone towards those payments, but direct it instead toward your mortgage. Using these funds to make extra payments against your mortgage balance, over and above your minimum monthly payment, can have a substantial impact on your remaining loan balance in just a few months.

  1. Don’t spend windfalls

If you get a bonus from work, a small inheritance, or even just cash for a holiday gift, don’t spend it. Apply these funds directly toward your mortgage as extra payments. If paying off your mortgage is your #1 goal, as it is for so many people, then you need to treat it as such. Once you’ve paid off high interest personal loans or credit card debt, your mortgage should be the next place to direct your money until it’s completely paid off.

  1. Staying out of debt

Paying off the mortgage is a great goal to work towards but requires discipline and focus. When you start to think about where your money is coming from and where it is going, you will begin to develop good financial habits and a proven ability to prioritize your mortgage over other areas. Instead of abandoning those habits, keep them and apply them to other areas of household spending.

Paying off a mortgage can be one of the most financially liberating steps that you can take. It takes a huge burden off your shoulders, and lets you rest easy and secure in your home. Paying off such a large obligation doesn’t happen overnight, but it’s a worthwhile goal for any borrower. To help get your mortgage paid off faster and avoid taking on new debt in the future, be sure to try the steps outlined above. Achieving this goal will require focus and dedication, but it can be done with hard work and persistence.

Steven McMeechan


Steven McMeechan is a strategic marketing and communications specialist with over twenty years’ experience in senior marketing management roles across a range of industries including Information Technology and Financial Services. He works for Capstone Financial Planning and lives in Melbourne Australia.

Carl Sera

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