16 Sep Tips For Paying Off Your Mortgage Faster
For most homeowners, paying off their mortgage quickly – so that they own their home free and clear – is a top priority. Paying down additional principal during the first years by a variety of means can shorten the mortgage — and dramatically lower the amount of interest you will end up paying over the life of the financing. Here are a few ways to make this happen:
- Consider making lump sum prepayments. Most lenders will allow you to do this on the anniversary date of the mortgage.
- Use your tax refund to make mortgage prepayments. Instead of spending your tax return, invest it in your financial future by putting it toward your mortgage.
- Consider making bi-weekly or weekly mortgage payments. This strategy can add the equivalent of another monthly payment each year, which can add up over the life of the mortgage.
- Round up your payments. Even a few extra dollars each month can amount to significant savings over the long term.
- Increase the amount of your payments when your income rises. The trick here is to keep your lifestyle generally at the same level as before, while concentrating on debt reduction.
- Ensure that your payments are as large as you can afford. Try tracking where your discretionary income goes each month – you may find room to increase your regular mortgage payment, or make a lump sum prepayment.
- For some variable rate mortgages, keep your payments the same size when rates go down. This allows you to put the savings associated with a lower rate towards the goal of principal reduction.
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Pam Martin of Invis, Mortgage Broker – Kelowna,Vernon, Penticton, Okanagan, British Columbia, Canada