For many homeowners, the biggest financial concern they face is paying off their mortgage. A home is one of the most expensive things you’ll ever buy so the price tag can be a bit of a shock initially. It’s no secret that homeowners daydream about making their final payment!
Luckily, small changes can make a big difference when it comes to planning for and paying off a mortgage. Take these five tips into consideration:
- Increase the frequency of your regular mortgage payments. Consider bi-weekly or weekly payments which will save you a ton of interest and help you become mortgage-free sooner.
- Choose the shortest amortization period and largest payment amount you can afford. Slightly higher payments will become a routine budget item and can take years off your payment structure in the long run.
- Consider making a lump sum payment. Depending on the options you select for your mortgage, you can choose to repay up to 10%, 15% or 20% of the original principal amount of your mortgage at any time during each year of the term. Even small amounts can make a big difference!
- If you can, increase your payment amount over time. Once you’re in the habit of paying the same amount every month, take the time to consider if a slight increase is possible. If your household incomes rises, consider increasing your mortgage payment accordingly as well.
- If your interest rates have decreased when you renew, keep your payments the same. Your principal balance will most likely be lower at this point, so if it is, it may indicate that a lower payment amount is available. If that’s the case, increase the payment to what you were paying before so the difference can go directly toward your principal, which will help pay off your mortgage faster.
These are just a few suggestions to discuss with your mortgage advisor. Contact us if you’d like to learn more about your options.