How To Pay Off Your Mortgage Faster

How To Pay Off Your Mortgage Faster

It's quite common to fall into the habit of living paycheck to paycheck, only covering the bare minimum on your bills for months or even years. Have you thought about setting new savings goals? More importantly, have you been able to achieve them? Have you thought about how to pay off your mortgage faster? Often, something unexpected pops up and hinders your progress. It could be a broken dishwasher, repairs needed for your truck, or even your best friend's destination wedding in Hawaii. Life has a way of throwing surprises at us.

While it may not always be your top priority, it's important to remember that your mortgage is more than just a transaction or another bill to pay. Choosing a mortgage means choosing a lifestyle. Just like nothing in life lasts forever, you shouldn't feel confined by your mortgage. So, let's get into how to pay off your mortgage faster?

Here are five key steps to get you started:

Accelerate your bi-weekly payments:

By doing this, you have the opportunity to save thousands of dollars in interest and make significant progress in your amortization schedule. Let's take an example: a $300,000 mortgage paid monthly with a 3 percent interest rate over 25 years would cost you $125,920.44 in interest. However, if you increase your payment frequency to accelerated bi-weekly payments, you could shave nearly three years off your amortization schedule and save $16,058.57 in interest. View some of the mortgage calculator tools we provide...

Round up your mortgage payments:

One painless way to expedite your mortgage repayment is to round up your payments. For instance, if your accelerated bi-weekly mortgage payments amount to $543, consider rounding up to $600 instead. The extra $57 can make a significant difference, and chances are you won't even notice the change in your monthly budget.

Utilize any 'found' money towards your mortgage payment:

Who doesn't appreciate the pleasant surprise of unexpected cash? Whether it's a birthday check from a relative or a work bonus, these instances qualify as 'found' money. The best part is that you can easily apply this additional money to your mortgage without affecting your budget since you weren't counting on it in the first place.

Make a lump sum anniversary payment:

Taking advantage of this opportunity by making a lump sum payment, even if it's as small as $50 per year, is an effective way to chip away at your mortgage. For example, on a $400,000 mortgage with an interest rate of 3.50 percent over 25 years, combined with a bi-weekly payment frequency, an annual lump sum payment of $250 can reduce your mortgage amortization by over 3.5 years.

Stay informed:

How to pay off your mortgage fasterOnce you have a mortgage and start making your payments, it's easy to forget about it since it becomes just another automatic payment. However, you're not here merely to pay your bills like clockwork. To be an informed homeowner, it's crucial to stay up-to-date on interest rates and new mortgage options.

By understanding what your options are, you could potentially save a substantial amount of money. For instance, let's say interest rates have dropped since you took out your mortgage a few years ago, but you're in the middle of a five-year fixed term with your bank. By understanding the penalties associated with breaking your mortgage and reapplying for a lower interest rate, you could potentially save thousands of dollars in the long run. Remember, the best mortgage is the one that suits your needs.

How can the team at Key Momentum Mortgages Ltd. serve you?

Now that you've learned a few ideas on how to pay off your mortgage faster, we're open for question. While paying down your mortgage early will mean less interest paid over the lifetime of the loan, and a shorter amortization schedule, it’s not always the best decision for every homeowner. We're here to help. We'll keep you advised of your progress, consistently helping to improve your personal wealth with sound feedback and advice throughout the life of your mortgage.

Let us help you save money!

Laura Mackie | Key Momentum Mortgages Ltd. Langley Mortgage Broker
Laura Mackie | Key Momentum Mortgages Ltd. Langley Mortgage Broker

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We're here to help with answers to your mortgage and alternative financing options. We look forward to serving you.

Laura Mackie, AMP | Mortgage Broker
Key Momentum Mortgages Ltd.

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