WAYS TO PAY DOWN YOUR MORTGAGE FASTER
TIP 1. Increase the amount of your payment. One of the ways to pay off your mortgage faster is to increase the number of your regular payments by a small amount. Variable rate mortgages can pay as though they have a fixed rate.
TIP 2. If you renew with a lower rate, keep the monthly payments the same. At the end of your mortgage term, when you renew or renegotiate your mortgage, you may be able to obtain a lower interest rate. Although you would have the option of reducing the number of your regular payments, you can take advantage of this situation to pay off your mortgage faster. Simply keeping the number of your payments the same will make you mortgage-free sooner.
TIP 3. Choose an "Accelerated" option for your mortgage payment. You can spend approximately the same amount of money on your mortgage each month and still save money by choosing an accelerated option for making your payments. Most financial institutions offer a number of payment frequency options. Less frequent to more frequent: monthly, semi-monthly, bi-weekly, accelerated bi-weekly, weekly, and accelerated weekly Accelerated weekly and accelerated bi-weekly payments can save you thousands, or even tens of thousands in interest charges because you'll pay off your mortgage much faster using these options. The reason is that you make the equivalent of one extra monthly payment per year. The standard payment options are monthly, semi-monthly, bi-weekly and weekly. For these four payment options, there is no difference in the total amount you will pay over a year. This means that there are very little extra savings if you switch from a monthly payment option to one of the other standard payment options.
TIP 4. Make lump sum-payments: Prepayments. A prepayment is a lump-sum payment that you make, in addition to your regular mortgage payments, before the end of your mortgage term. The prepayment reduces your outstanding balance and allows you to pay off your mortgage faster. The sooner you can make the prepayment, the less interest you will pay over the long term.
Article provided by Jeff Attwooll, Mortgage Broker, he can be reached at 519-620-1175 or 855-620-1175.