Most homeowners remain focused so much on their mortgage rates that they often don’t consider prepayment options. Don’t be one of them. You can use these five strategies to pay off your mortgage sooner.
1. Pay more in addition to your monthly mortgage payment
Paying more than what is actually required is a great way to help you quickly pay down your mortgage. Whether you pay $25 or $100 more, it all adds up in the end. For example, let’s say your mortgage is $450,000 and your fixed-rate is 2.85 percent. If you pay an additional $50 per month, in just five years your principal loan would decrease by 2.5 percent. In these five years you can save several thousand dollars.
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Use annual raises, commissions or bonuses
It’s likely that you’re employed if you already have a mortgage. Most employees receive annual raises. Others may also receive commission or performance bonuses. When you receive a bonus, commision or a pay increase, apply the extra funds to your mortgage to help you reduce your principal mortgage debt.
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Double-down on your regular payments
For just one year you can speed up your mortgage payment and reduce your debt. It’s betting time, so why not double-down? If you simply double up on your mortgage payments for one year you’ll also see substantial savings and take months or years off the amortization period.
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Tax refunds come in handy when you need them
Think of the long run, and your mortgage renewal. Prepaying your mortgage with a lump-sum payment such as a tax refund can pay down your mortgage and give you a nice surprise come renewal. Although this doesn’t reduce your regular monthly payments, it will still benefit you.
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Bonds, GICs, RRSPs, oh my!
Having one or multiple investments can be a wise move when you have a home mortgage loan, especial if your investments are low-risk. Cash in on your bonds, GICs or RRSPs and use them to pay off your principal mortgage.
The point here is that there are a number of ways you can pay your mortgage sooner and any little bit or method can help. Use financial resources to your advantage, such as your local mortgage broker. Find out what strategy can prove to be the most advantageous for you.
When we say Yes! We stand behind our promise.
