Not only is it important to choose the right mortgage product and rate that’s catered to your unique needs, but it’s also vital to repay your mortgage in a way that will save you the most money.
The schedule you choose for your mortgage repayment can have a significant impact on the amount of money you put towards your principal balance. The more you can pay down your principal balance, the less interest you’ll pay throughout the life of your mortgage. Every extra effort you make – no matter how big or small – towards your mortgage each year can help bring you closer to becoming mortgage free.
Even if you’re in your very first mortgage, there are some small steps you can take right away to reduce the overall amount of money you’ll pay towards your mortgage.
How do I pay my mortgage off quicker?
One of the easiest ways to put more money towards your mortgage while not having a significant impact on your cash flow is moving to a different payment schedule, such as accelerated biweekly payments. Accelerated biweekly payments (26 payments per year) won’t only pay your mortgage off quicker, but will also save you a significant amount of money over the term of your mortgage. This option means you’re making one additional monthly payment per year, which can really add up over the course of your time as a mortgage holder.
Another prepayment option involves taking advantage of flexible payments. Most lenders allow you to increase your regular payment up to a set maximum, such as 15%, while others allow you to double up your payments. You agent will help you determine your specific limits.
If, for instance, you have a $1,000 per month mortgage payment and increase it by 15% to $1,150, you could speed up payment on a $200,000 mortgage by as much as five-and-a-half years.
Even rounding up your mortgage payments a few dollars each time can help make your balance decline sooner. If you round up your mortgage payment from, say, $966 to an even figure such as $1,000, you can feel confident in knowing that every extra bit is going towards your principal balance.
Have questions about paying your mortgage down faster or your mortgage options in general? Answers are just a phone call or email away!