Mortgage methods

How can you pay off your mortgage more quickly?

Most homeowners would love nothing more than not to have to put that monthly mortgage cheque in their account.

Trying to pay off your mortgage ahead of schedule is not something to be undertaken lightly. You must make sure you are financially secure, with no other significant debt, and have money in reserve for emergencies.

There are also compelling arguments for not paying off your mortgage ahead of schedule. For instance, you may want to enjoy your money now.

By allotting less of your income toward your mortgage, you have more money available for vacations and other uses. Or you could use the money for home improvement, which can make your home more comfortable and valuable when you are ready to sell.

In your haste to be rid of your monthly mortgage burden, you cannot afford to mortgage your financial future. Make sure you will be able to finance your children’s college education and your own retirement.

However, if you are in a debt-free financial position where you can pay off your mortgage more quickly without sacrificing other aspects of your life, there are ways to accomplish this.

Naturally, you will have to consult your mortgage broker to see what you can and cannot do.

Here are a few of the more popular options.

  • Increase your payment schedule. Bi-weekly mortgage payments have become increasingly popular as a way to pay off a mortgage more quickly.
  • This will allow you to make one extra full payment per year and will end up saving you thousands of dollars in mortgage interest while cutting years off of your loan.
  • Signing up for a bi-weekly or accelerated mortgage payment program will not only help you save money and cut the term of your loan down, but it they will also help you build equity into your home faster.
  • Make lump sum payments. Depending on the terms of your mortgage agreement, you may be able to make lump-sum payments at specific times.
  • For example, you could earmark your bonus check of $5,000 to pay off part of your mortgage.
  • A lump-sum payment is applied directly to your outstanding principal if there is no outstanding interest owing.This saves you money over the course of your mortgage.
  • Shorten the time frame of your loan. You could elect to refinance and change your 35-year mortgage to a 15-year mortgage. Bear in mind, though, that your monthly payments will be considerably higher.
  • Increase your paymentsIf your financial situation has improved and you are making more money, you may be able to make higher payments or balloon payments.
  • Most loans will allow you to increase your payments in this manner with certain restrictions.
  • Refinance at a lower interest rate, but pay the same amount each month as you did before.
  • If you maintain a 35-year mortgage, but the interest rate drops from 3.85 per cent to 2.49 per cent, the money you were paying in interest can now be applied to the principal.

Remember, the first step is to make sure you can afford to pay off your mortgage more quickly.

If you can, talk with your mortgage broker to find out which of these strategies is best for you.

Please call to meet to arrange a strategy to suit your needs (250 862 1806) or email [email protected].


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About the Author

Tracy Head and Laurie Baird help busy families find mortgage solutions. Together they have more than 45 years of experience in the mortgage industry.

With today’s increasingly complicated mortgage rules, Tracy and Laurie spend time getting to know the people they work with and help them to better understand the mortgage process. They support their clients before, during, and after their mortgage is in place.

Tracy and Laurie work closely with their clients, offering advice and options. With access to more than 40 different lenders, Tracy and Laurie are able to assist with residential, commercial, and reverse mortgages in order to match the needs of their clients with the right mortgage package.

They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit http://www.okanaganmortgages.com

Visit their blog at https://www.okanaganmortgages.com/blog


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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