How to Pay Off a 30 Year Mortgage in 12 Years

It's that time of year again. Each January, I adjust my automatic payment plan with our mortgage company so that our mortgage will be paid off sooner. I plan to pay our 30 year note off in 12 years.

There are a lot of good ideas out there on how to pay your mortgage off early.

• Make bi-monthly payments instead of monthly.
• Pay an additional 10% of the payment each month.
• Make an extra monthly payment each year with your income tax refund, Christmas or birthday gifts, or other source.

Doing any of the above will take about 7 years off of your mortgage.

I'm no financial guru or expert. Though I read a good bit on money management and investing, I am no Warren Buffett. (No, Warren is not Jimmy's brother. He is perhaps one of the greatest investors of this generation.) So, if you agree or disagree with this plan, so be it. It is what I've chosen for us to do and so far it seems to be working out great. I have not seen this "strategy" in anything I've read which means it is either a great original thought or a dumb original idea. We'll see.

My 30 to 12 plan:

We refinanced our mortgage in the fall of 2008 when the rates drastically dropped. I was glad to make this transaction but I did not want to have a mortgage hanging over my head for 30 more years so I created a plan.

Beginning with the first payment, I paid $100 in additional principal each month for the first year. Each year one of us usually gets a cost of living increase. I determined that with our small increase in salary, I would increase the additional principal payment by $100 each January. Therefore, at the beginning of the second year I would add $200 to the principal each month. The third year I added another $100 so that my additional principal payment was $300 and so on. By the 10th year, I will be paying an additional $1000 each month toward principal using this strategy.

Because we are slowly adding to our principal payments each year using our salary increases, the additional $100 per month doesn't sting too bad and it doesn't affect our monthly budget. I chose $100 each month. You may do more or less. The point is by adding a little bit each month and incrementally increasing that figure each year, it will dwindle your mortgage balance down quicker than the original terms of the note.


I ran an amortization table and projected out my mortgage payments using this strategy and, in our case, it makes our 30 year note a 12 year note.

Ask me how I did in 2020.