Think your house is comfortable now? Imagine walking through the door knowing that you never need to make a mortgage payment again. In addition to the satisfaction of being mortgage free, paying off your mortgage faster can save you money by reducing the interest you pay.
Here are a few strategies that can help you pay off your mortgage faster:
Strategy #1: Increase the frequency of payments
• Take advantage of biweekly or weekly payment options rather than monthly payments.
Strategy #2: Take advantage of increased payment options
• Pay more with each installment. Some banks allow customers to increase their payments by up to 100% of their regular payment amount at any time throughout the term of the mortgage. Even increasing by 10% can make a big difference over time.
Strategy #3: Take advantage of lump–sum payments
• Most banks offer the opportunity to make lump–sum payments on your mortgage. Check with your mortgage provider about the maximum lump–sum payment you can make. It may be up to 20% of the original borrowed amount
Strategy #4: Choose a shorter amortization period
• Most mortgages are amortized over a 25-30 year period, meaning that's how long it will take for your combination of principal and interest payments to pay off the outstanding balance. A shorter amortization period may dramatically reduce the amount of interest you pay over the shortened life of your mortgage.
Strategy #5: Do it all! Take advantage of flexible features
• Investigate the mortgage options offered by your bank. Then check with a Mortgage Broker to see if they can find a more flexible mortgage. Flexible mortgage payment features can provide you with peace of mind and more control in the event you need to reduce your payments.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.