How do I Pay my Mortgage off Faster?
If you’re a member of the Debt Club (i.e. you have a mortgage that will take you quite a while to pay off), you need to start planning for your ‘graduation day’ – the day when you become Debt Free.
Although your amortization says 25 years – there and a few simple steps that you can take to make sure you become debt-free faster and spend less money on interest along the way.
Step One: Adjust Your Payment Schedule
This is quite possibly the easiest change that you can make to help pay down your home loan faster. Switch from monthly mortgage payments to bi-weekly rapid payments. Instead of 12 payments a month, you’ll end up making 26 half payments. You probably won’t even notice the extra money coming out of your account, but what you will notice is the effect these extra payments will have on your total mortgage amount outstanding.
Step Two: Make Regular Lump Sum Payments
Not everyone has an extra $20,000 lying around the house to throw onto the mortgage at the end of the year. But don’t think about a lump-sum payment as needing to be such a high number. Even if you’re able to put aside a hundred dollars a month for the annual payment (even an extra $1200 a year), it will help bring you to graduation day a lot sooner.
Step Three: Don’t Sign your Renewal Letter
When your mortgage is up for renewal, don’t sign the letter that you get in the mail from your lender. The convenience is tempting and yes – nobody likes to be reminded about their debts, but it’s very unlikely that the interest rate in the renewal letter is the best offer available to you.
Step Four: Compare Mortgage Rates
Make sure you compare the market before choosing a lender. Just like how you compare flights - mortgage rates are no different. If you compare the market, you’re bound to find a better deal or at least be in a position to negotiate more effectively with your current mortgage lender.
Step Five: Get a Good Advisor
There’s nothing like a good piece of advice. We help you learn about mortgages, but for advice related to your personal situation - it’s best to get in touch with a mortgage professional and start building the relationship.
Step Six: Get the Right Type of Mortgage for you
If you’re sitting on a fixed mortgage product and you think you can handle a bit more uncertainty, then look at variable mortgage rate options. Likewise, if you have a variable mortgage and can’t handle the stress of not knowing what your monthly payments will be, maybe it’s time to get a fixed mortgage. There are a number of different mortgage products on the market, and finding the right one for you will give you one less reason to be stressed.