- Accelerate your payments.
Making the change from monthly payments to accelerated bi-weekly payments is one of the easiest ways you can make a difference to the bottom line of your mortgage. If you get pay biweekly these payments are easy to match up with your pay cheque periods. Many people find it easier to manage their personal funds on a biweekly basis, so this is a really great way to built equity in your property faster and save interest on your mortgage.
A traditional mortgage splits the amount owing to 12 equal monthly payments. Accelerated biweekly is simply taking a regular monthly payment and dividing it in two, but instead of making 24 payments, you make 26. The extra two payments really reduce the amount if interest you pay therefore speeding up the payment of the balance faster.
- Increase your regular mortgage payments
Chances are, you have the ability to increase your regular mortgage payment by 10-20% of your required monthly payment. This is a great option if you have some extra cash flow. The extra money will go directly toward paying down the principal amount owing on your mortgage. By paying down your principal balance faster you pay less interest overall.
Simply round up to the nearest $20.00 or $50.00 and you will see the savings sooner than later.
- Make a lump sum payment
Depending on your lender and your mortgage product, you should be able to put down up to 20% of the original mortgage balance annually. Lenders have time frames around when and how often you can make these annual payments, so know your mortgage. If you have not taken advantage of a lump sum payment yet this year, you are very likely eligible.
- Review your options regularly
As your mortgage payments are withdrawn from your bank account on a set schedule, it’s easy to put your mortgage payments on autopilot, and forget about your goals. An annual review is a good idea!
Reviewing your mortgage annually, will enable you to set short-term and your long-term goals.
Special point: Just doing one of these things will reduce your mortgage debt faster and save you many dollars in interest! Exercising two or all three of these options will allow you to be mortgage free sooner than your think!
Want to play with some numbers? Check out my mortgage App at https://maapp.ca/app/yvonne-wilchewski