Tips to Pay Off Your Mortgage Faster:

1. Make Bi-Weekly or Weekly Payments

Due to the compounding effect of interest, paying more frequently will have a small but positive impact on paying off more principal and less interest. 

2. Accelerate Your Payment

Opt for accelerated weekly or bi-weekly payments to reduce the loan term and interest costs. Your payment will increase slightly (for biweekly the same amount as a semi-monthly payment).  This will have a signifiant positive impact on paying off more principal and less interest and becoming mortgage free sooner. On average you will take off about 3 years of payments on a 25 year amortization.

3. Make Lump-Sum Payments

Whenever you can, use prepayment privileges to make lump-sum payments to the mortgage without penalties. You can do this with any or every mortgage payment, and can setup regularly reoccurring lump sum payments.  Ensure the total is not more than your annual allowed prepayment privileges.

4. Increase Regular Payments

Use your prepayment privileges to increase your regular payments to the mortgage without penalties. Ensure the total is not more than your annual allowed prepayment privileges.

5. Round Up Payments

Round up your payments (e.g., from $950 to $1,000) to pay down the mortgage faster.

6. Allocate Extra Income

Apply bonuses, tax refunds, or other windfalls directly to your mortgage principal.  This will very effectively shorten the amortization period.

7. Choose a Shorter Amortization

Carefully consider your monthly financial budget, and if possible, choose a shorter amortization (e.g., 20 years instead of 25). Mortgage payments will be higher but reduce total interest paid over the life of the loan. Keep in mind, you can always effectively reduce the amortization by making use of your prepayment privileges. However you cannot increase the original amortization without discharging and reregistering the mortgage which cost fees. Consult with your broker and consider future income changes like time off on maternity leave that may require minimizing your payments for a season.

8. Avoid HELOC’s

Easy access to your home equity via a home equity secure line of credit may cause some to not think twice before increasing the debt load.  Minimize borrowing against your home equity to avoid increasing your interest and debt.

9. Plan & Budget

Follow a good financial plan with a well thought out budget, and plan to extra payments into your budget to stay consistent with becoming mortgage free sooner. Small changes can significantly reduce your mortgage term and save thousands in interest.

10. Get a Mortgage Checkup

Have your mortgage professional complete an annual mortgage performance checkup for you to ensure your mortgage is performing optimally. Sometimes with a lower rate market, it make save you interest and benefit you in the long run to replace a poor performing mortgage with a lower rate. Careful calculations will be completed and considered to ensure your best interest is protected. 

10. Get a Financial Checkup

Have your mortgage professional or financial advisor complete an annual financial review for you to ensure you are managing your finances and following your budget optimally. Sometimes due to unforeseen events or circumstances, if debt loads have increase and your cash flow has been impacted – it may benefit you to complete a debt consolidation to save you interest, increase your cash flow, and benefit you in the long run to get rid of high interest debt and get back on track with a good budget plan. Careful calculations will be completed and considered to ensure your best interest is protected. 

11.Get the Lowest Interest Rate

Have your top preforming broker shop around for the lowest rates at purchase, renewal or refinance to reduce interest costs.  The lower the rate, the lower your interest, the lower your payments, and the quicker you will become mortgage free.  Our goal and commitment is to ensure each of our clients get the lowest rate right up to their closing date.

We are here to help guide you if you need assistance with becoming mortgage free sooner!