Canadians are carrying a record amount of debt. Your mortgage is one of the biggest and longest-running debts you will ever pay. The monthly payments can consume a large percentage of your earnings thus reducing your cash flow. Paying down your mortgage will not only lower your debt, but it will also lower the amount of money you spend on interest.
How do I pay off my mortgage faster? Here are some ideas:
1. Accelerate Your Payment Plan
If your mortgage payment schedule only includes monthly payments, you might want to consider an accelerated payment plan. Your monthly bill could be broken down into smaller amounts that are withdrawn weekly or biweekly with an accelerated payment plan. Accelerated plans with more frequent installments reduce the interest you would pay over time.
2. Shorten Your Amortization Period
Usually, a mortgage amortization period is 25 years but you can reduce that to five, 10, 15, or 20 years. The shorter the amortization period is, the faster you can pay off your mortgage. Many homeowners will choose longer time frames to lower their regular payments, but those increase the total amount of interest paid over the life of the mortgage.
3. Increasing Your Payments
You can pay off your mortgage faster by increasing the amount you pay. Even a small increase of $100 more per month will lower the total interest you pay and take years off your mortgage.
4. Lump-Sum Payments
By making lump sum payments, you can shorten the time it will take to pay off your mortgage. Whether you put extra money down monthly, quarterly or yearly, the long-term savings will be significant. Numerous lenders allow you to make a lump-sum payment on your mortgage one or more times a year without being penalized
Every year, you can pay a lump sum of up to 20% of the outstanding principal. An annual lump sum payment will reduce the total amount of interest you pay and take years off your mortgage.
5. Keep Paying The Same Amount When You Renew
Your payments will be lowered if you’re able to get a lower rate when your mortgage comes up for renewal. But rather than making the payments smaller, you should keep paying the same amount. In the long run, you will be paying less interest and your mortgage will get paid off faster. By maintaining a consistent payment plan on a lower interest loan, you will be paying more of your mortgage without affecting your budget.
6. Find Ways To Maximize The Usage Of Your Property
Another way to help speed up paying off your mortgage is by renting out some or all of your property. For example, you could find a roommate, rent out a secondary unit, or be a host for short-term renters.
If having a tenant isn’t your thing, and you don’t want to concern yourself with landlord insurance, you can still earn rental income from your home in other ways. For example, you could rent an unused parking space or rent out space for storage.
7. Get A Lower Mortgage Rate
You should consider employing a mortgage broker to shop around for the best mortgage rates for you. A lower rate will result in smaller mortgage payments as more of your money will be applied towards the principal making your interest payments less.
Dominion Lending Centres NasaKasa
At Dominion Lending Centres NasaKasa we work with home buyers every day and can help you with the mortgage process every step of the way! Call us 905.997.7001 or email us firstname.lastname@example.org to discuss your mortgage lending needs.