How to Payoff Mortgage Faster
Imagine a life with no mortgage. How satisfying it would be knowing that your home is truly your’s. So much cash in hand and much more savings when there is no financial obligation such as the mortgage.
There are several ways to payoff your mortgage sooner. Let’s explore.
Get the best interest rate.
Low interest rate translates to big savings over the term of the mortgage. Always choose the rate that fits your situation and repayment plan. Carefully review your plans when selecting a fixed or variable rate. Variable rate can change and fluctuates based on Prime Interest Rate. Cash back mortgage is available but for higher interest rate. Never over extend yourself by taking a mortgage higher than you need.
Take advantage by using prepayment privileges to pay off your mortgage by paying lump sum amounts at the anniversary of your mortgage. The amount is applied towards the outstanding principal and you pay less interest over the life of mortgage. Making same payments will help in reducing the amortization of the loan. Thus you will be mortgage free sooner. You can pay any amount as lump sum at the time of renewal as well.
Make a lump sum payment.
You may be able to put certain amount as lump sum payment towards your mortgage. The clause for amount is stated in the mortgage contract. If your payment is more than the amount mentioned in contract you may end up paying prepayment penalty.
Payments can be made:
- Before the end of mortgage term.
- At the end your term.
- At certain times during the contract.
- On certain dates set in the contract.
Always check your contract before making payment and ask your lender about prepayment options available. Talk to your Broker can let you know if it really makes sense.
Choose Bi-weekly accelerated payments.
This option helps you pay one extra monthly payment every year.
Increase your mortgage payment.
Choose to pay higher than your regular mortgage payment. This helps to pay down your principal faster.
Use extra cash available
Use extra cash available like tax refund or bonuses received to make yearly payment on your mortgage. You can increase regular payment by a certain amount or percentage when there is increase in income.