How to Pay Off Your Mortgage With a Personal Loan

By: Alan Sembera

Personal loans are normally based on your credit history and ability to repay the loan.

Jupiterimages/liquidlibrary/Getty Images

A home mortgage is usually a long-term commitment, but if you want to own your home free and clear, you can pay off your mortgage at any time. Using a personal loan to pay off the mortgage generally isn't recommended because of higher interest rates, but other considerations sometimes come into play.

Step 1

Ask your mortgage lender for a "payout statement" based on the date you anticipate making the payment. This document will show the exact total needed to pay off the mortgage on the specified date along with any early payment penalties that were part of your mortgage contract. The statement should also include instructions on how to adjust the amount if you pay before or after the specified date. In many cases you can get this information verbally without the need for a formal statement.

Step 2

Secure a personal loan or line of credit large enough to pay off the mortgage. If you use a bank or other financial institution, your ability to borrow will be based on your credit history, your income and the amount of debt you already carry. You can usually qualify for a larger loan amounts with lower interest rates if you have other property or investments you can use as collateral.

Step 3

Pay off the mortgage according to the instructions from your mortgage lender. If you obtained a payout statement, the instructions will be in the document. In most cases you can either send a bank-to-bank wire transfer or mail a check.

Step 4

Make sure the mortgage lien is released from your property deed. In many cases the lender will take care of this for you, although it might charge you a separate fee. If the lender takes care of it, the local property records office will send you a copy of a new deed after several weeks. In other cases the lender will send the mortgage discharge papers directly to you, and you will have to go to your local property records office and have the lien removed yourself. You normally have to pay a fee for this service.


  • If you are paying off your mortgage because you are stuck with high interest rates, you might have the option of refinancing the mortgage at a lower rate instead of taking out a personal loan.
  • If your lender has been paying your homeowners insurance and property taxes through an escrow account, make sure you receive a refund of any unused amounts. Contact the insurance company and local taxing authorities to let them know you no longer have a mortgage so they can begin sending bills directly to your address.
  • Cancel any automatic mortgage payments you have set up through your bank.


About the Author

Alan Sembera began writing for local newspapers in Texas and Louisiana. His professional career includes stints as a computer tech, information editor and income tax preparer. Sembera now writes full time about business and technology. He holds a Bachelor of Arts in journalism from Texas A&M University.

Photo Credits

  • Jupiterimages/liquidlibrary/Getty Images

Zacks Investment Research

is an A+ Rated BBB

Accredited Business.