Have you ever wondered how you could pay down your mortgage faster? As we both know, being a homeowner has it perks, but having a mortgage isn’t one of them. So, if you are looking to become mortgage free sooner, here are 4 ideas for you to consider!
Accelerate your payments
One of the easiest ways is to make the change from monthly payment to accelerated bi-weekly payments. Most people don’t even notice the difference or increased payment.
Here how it works, a traditional mortgage with monthly payments splits the amount owing annually into 12 equal payments. The accelerated biweekly is simply taking a regular monthly payment and dividing it by 2, plus 2 extra weeks. Thus, you are making 26 payments and the extra 2 payments pays it down faster.
Increase your regular mortgage payments
Depending on your lender and the terms of your existing mortgage, you can increase your regular mortgage payment by 10-15%. Some lenders even allow you to double-up your mortgage payments. These payments will be applied directly to principal amount owning.
Make a lump-sum payment
Depending on your lender and the terms of your existing mortgage, you should be able to contribute between 10-15% of the original balance in a bulk payment. Some lenders are particular about timing of these payments; however, you should be eligible if you haven’t made a lump sum payment yet this year.
Making a lump sum payment is a great option if you come into some money or receive an annual bonus from your employer. This will reduce your principal amount owning on the mortgage and will reduce the amount of interest charged over the life of the mortgage.
Review your options regularly
As your mortgage payment comes out on a regular basis (hopefully after reading this, you will review and opt to accelerate), it is easy to set and forget not reviewing until renewal, which is often 5 years later. As a result, you are less in control and are not able to make informed decision about your mortgage based on market conditions.
One of the post-mortgage services I offer, is a free annual review. It’s a great time to see if there are opportunities to refinance your mortgage and lower your overall cost of borrowing.
If you have questions about your existing mortgage or want to compare your options available today, please connect anytime. It would be a pleasure to work with you.