It is a no brainer that paying your mortgage faster will lower the debt and also the interest that you have to pay on the mortgage. A mortgage is one of the biggest and longest-running debts that one has to be. It consumes a huge chunk of your income. Your mortgage broker north York will help you to find the best and the most suited mortgage deal, but it is up to you to make an effort into paying back the mortgage faster so that the interest rate is lower and there are shorter amortization terms. Amortization can range from anywhere between thirty to thirty-five years. Here is how you can pay off your mortgage faster than anticipated.
Paying in a Lump Sum
When you are paying a lump sum amount of your mortgage, then it will shorten the time you would take to pay off the loan. You could put down extra money either monthly, quarterly or yearly, which will have a substantial impact on your long-term savings. This way every year you can pay about 20% of the outstanding principal in the form of a lump sum. An annual lump sum payment reduces the amount of interest that you would pay but also would take years off the life of your mortgage.
Accelerated Payment Plan
In case your mortgage payment plan only has monthly payments, then you could opt for an accelerated payment plan. With an accelerated payment plan you can break down your monthly bills into smaller amounts which are withdrawn either weekly or biweekly. When you opt for an accelerated payment play, it helps to reduce the interest you would have to pay over the mortgage and it serves equivalent to making one extra payment every year.
Making the Same Payment but on a lower interest loan
After renewing the mortgage, if the interest rates lower then it is a good idea to continue with the same amount of monthly installations. By maintaining a consistent payment plan even on a lower interest rate loan, you would be paying more mortgage which will not impact your budget.
Increase Mortgage payments
When you are refinancing your mortgage, you could ask to increase your payments instead of accepting the monthly rate which has been set by the lender. Even with a small increase of about $100 per month will help to lower the total interest that you will have to pay and would also take years off your mortgage life.