There are a couple ways to pay off a 30-year mortgage in 15 years, including making extra payments toward the principal, making biweekly payments, and more. And paying off a home loan early can save a boatload of interest.
But before you become a mortgage-paying overachiever, there are a few things you need to know about how to pay a 30-year mortgage in 15 years and what to consider before you do. Let’s take a look.
Paying Off a 30-Year Mortgage Faster
When you start paying on a 30-year mortgage, most of your payment will go toward interest rather than the principal (the amount you borrowed). This makes paying down your mortgage and building equity a slow process.
Over time, the percentage of your payment that goes toward interest vs. principal will change. Toward the end of your 30-year loan, you will pay more toward the principal than interest. This is what’s known as mortgage amortization.
Instead of following the amortization schedule, paying more on your mortgage loan — in one way or another — will reduce the principal more quickly, which means you’ll pay less interest overall.
Should You Pay Off Your Mortgage Faster?
Paying off your mortgage faster may give you a sense of accomplishment and save you a lot of money in interest charges, but if it takes you further away from your financial goals, it may not be worth it to you. Consider what you value most before deciding to put extra money toward paying off your mortgage.
Recommended: Is it Smart to Pay Off a Mortgage Early?
Pros and Cons of Paying Off Your Mortgage Early
Paying off a 30-year mortgage in 15 years has benefits, but in some cases, it may not make sense to. Consider these pros and cons.
| Pros | Cons |
|---|---|
| Get rid of mortgage faster | Higher monthly payment |
| Own your home outright sooner | You will lose the home mortgage interest tax deduction (if you itemize) |
| Build equity faster | Less money available for retirement, higher-interest debt, a rainy day fund, etc. |
| Save money on interest | Gains by investing could trump interest saved |
Factors to Consider Before Paying Off Your Mortgage Faster
While paying off your mortgage early — a few zealous borrowers aim to pay off a mortgage in five years — can save you tens of thousands of dollars in interest, the lost opportunities from not having money readily available for other things could be more valuable. Think about:
• Have I been contributing enough to my retirement plans as an employee or funding retirement as a self-employed person?
• Do I have three to six months of expenses, or more, if my personal situation calls for it, in an emergency fund?
• Am I able to secure a lower rate or shorter term for a refinance to pay off my mortgage faster? Would a cash-out refinance make sense?
• Do I have higher-interest debt like credit card debt or student loans I should tackle first?
• Have I set up a college fund (if kids are in the picture)?
• Does my mortgage carry a prepayment penalty? (This is unlikely for loans originated after January 2014)
How to Pay Off a 30-Year Mortgage Faster
There are at least three methods to pay off a 30-year mortgage in 15 years if that’s your goal.
Make Extra Principal Payments
Paying more toward principal is the primary way to pay off a 30-year mortgage early.
Here’s an example of how interest adds up: Assuming you buy a $350,000 house and put 10% down on a 30-year mortgage at 5.5%, this mortgage calculator shows that total interest will be $328,870. Even by the 120th payment, you will have paid only $55,000 of the $315,000 principal and will have paid nearly $160,000 in interest.
Putting just $200 more per month toward principal, you’d save $80,837 in interest and pay off the mortgage six years and four months earlier.
To pay off this same mortgage in 15 years, however, you would need to put an extra $787 per month from the outset of the mortgage. That’s a substantial additional expense for many homeowners. You would, however, save more than $180,000 in interest over the life of the loan.
Switch to Biweekly Payments
Biweekly payments are half-payments made every two weeks instead of a full payment once a month. Making biweekly payments instead of monthly payments results in one additional payment each year.
Using the example above, making one full, extra mortgage payment each year will reduce the amount of time it takes to pay off your 30-year mortgage, but only by five years.
Look Into Refinancing
Refinancing your loan into one with a lower interest rate and/or a shorter term (such as a 15-year mortgage) can help you pay off your mortgage faster. A shorter term usually comes with a lower interest rate, so you’re saving on interest while also paying your mortgage off sooner than 30 years.
Refinancing to a lower interest rate will reduce your monthly mortgage payment, so if you continue to make the higher payment, you’ll pay your mortgage off faster.
Recommended: Mortgage Questions for Your Lender
The Takeaway
There are a couple ways to pay off a 30-year mortgage in 15 years. Paying off your mortgage early will result in substantial interest savings, but the tradeoff for many borrowers is not having extra money to put toward retirement and other purposes.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
Is it cheaper to pay off a 30-year mortgage in 15 years?
The amount of interest you’ll save by paying off your mortgage in 15 years instead of 30 is substantial.
Why shouldn’t you pay off your mortgage early?
Homeowners who haven’t fully funded their retirement accounts, who don’t have an emergency fund, or who have other debt with high interest rates may not want to pay off a mortgage early. Also, those who think they can earn a better return on their money with investments may not want to pay off their mortgage early. (They need to keep in mind that past performance is not necessarily indicative of future returns.)
How do you pay off a 30-year mortgage in half the time?
Paying more toward the principal early in the mortgage can help you cut the amount of time you spend paying on your mortgage in half. The good news is you don’t have to make double payments to cut the amount of time you pay on your mortgage in half. Because each payment will reduce the principal, you will pay less overall.
Are biweekly mortgage payments a good idea?
Biweekly mortgage payments, or half-payments made every two weeks, will add a full mortgage payment every year. Using this method can take a few years off your mortgage.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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