Looking for easy (and affordable) ways to become mortgage-free faster? Here are five simple tips:
1. Buying a Home You Can Afford
Set your self on the road on the road to success right from the get-go. Before hitting the market in search of your dream home, crunch some numbers to determine how much you can realistically afford (we recommend seeking a mortgage pre-approval). However - just because you can buy a more expensive home doesn’t mean you should. By choosing a more affordable property, you’ll be able to put more towards your monthly mortgage payments – thereby allowing you to pay your loan off more quickly.
2. Up Your Payment Frequency
Speaking of putting more towards your monthly mortgage payments, increasing your payment frequency is another effective tactic for paying your loan off faster. Even better, there are a variety of options available, giving you the chance to choose the frequency best suited to your unique needs. These include:
Bi-Weekly Accelerated Payments
Weekly Accelerated Payments
Be sure to talk to your mortgage broker for more advice on which frequency may be right for you.
3. Make a Lump-Sum Payment
Depending on the conditions outlined in your mortgage contract, you may be eligible to contribute an additional lump-sum on top of your regular mortgage payments. Known as a “prepayment privilege,” this option allows you to put a certain extra percentage towards your loan without any prepayment penalties. These larger, bulk payments can typically be made:
Before or at the end of your mortgage term
Specific times or dates throughout your contract
Here again, prepayment options will vary by lender, so be sure to check with your provider or broker ahead of time.
4. Refinance For a Shorter Term
In short, refinancing your home means replacing your existing mortgage loan with a new one. If you want to pay your loan off faster, experts recommend refinancing to a shorter term (i.e. 15-years vs. the standard 30), in which case you’ll benefit from lower interest rates (giving you more to put towards your principal) or the ability to increase your monthly payments.
5. Take Advantage of Windfalls
Even the smallest amounts can make a big difference over the lifetime of your mortgage. If nothing else, consider using unexpected windfalls as an opportunity to put more towards your loan. For instance, the additional funds from a recent promotion or raise, a work-related bonus and even your annual tax return will all help you reach your goal of becoming mortgage-free much faster.
Whether you’re looking to pay your loan off faster, buy a new home or simply secure a better mortgage rate, we can help! Our online application form only takes a few moments to complete, and we’ll get back to you soon.
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