House debts are at an all-time high in Canada currently and who doesn't want to get out of the mortgage or the long debt situation? If you want to pay off your mortgage faster here are five ways in which you can do so.
Accelerate Your Mortgage Payments – The biweekly option
Most of you may be making your mortgage payments on a month-on-month basis. But there is another option you could explore. This is called the accelerated bi-weekly option. Instead of making 12 payments towards the mortgage annually, you would make 26 payments. In this way, you would be able to pay off your mortgage two years earlier than if you would be making payments towards the mortgage on a monthly basis.
Round Up The Sum Towards Mortgage
A simple solution to paying more is by rounding up the payment of the mortgage sum. If you have already accelerated your payments by opting for bi-weekly payments, then round them up. For example, if you have a bi-weekly payment of $639, you could round it up to $700 instead. You will hardly notice the difference when it comes to your budget but that extra money paid will work towards making the mortgage disappear faster. If you or your partner get a promotion or pay hike, utilize that extra money you will now be earning to pay off the mortgage and put a hold on your lifestyle needs for a while.
Pay A Lump Sum
Given you have some extra money at certain points you could choose to pay a lump sum. This is a big step as you would be paying up a big chunk of your current cash in anticipation of benefits which are not visible instantly. Lump Sum payments are made over and above your regular payments towards the mortgage. There are, however, clauses in your contract specifying when you can pay a lump sum such as certain periods during the mortgage term, certain dates specified in the contract, just before the end of term, or even at end of the term. Go through your contract to explore this option.
When Renewing Mortgage Keep Payments Same
If your mortgage is due for renewal there is a possibility you may get a new one at a low rate of interest. Your mortgage lender may give you the early renewal option which is given to extend the mortgage length before term end. And when you will pay a low rate of interest you will also have a chance to reduce the money due to mortgage payments. Naturally, if you do so, you will be bound by the mortgage for a longer time, so it is better to keep your older payments instead of a reduced sum so that you can be mortgage-free faster.
Add ‘Found Money’
'Found Money' simply means windfall money or money that you suddenly land up with such as money from relatives, pay hike or bonus at work, etc. You have the option to apply such money towards your mortgage.
If you are looking at paying your mortgage faster and have any doubts we are happy to help.