Tips to Pay Your Mortgage off Early!
Given the increased size of the average mortgage (and amortization) these days it can be somewhat daunting to contemplate the actual amount of interest that you pay over the life of your mortgage. Fortunately, there are a few things you can do to repay your loan early and save thousands of dollars in interest even if you have a fixed rate closed mortgage. Lump-sum payments of $50,000 a year would obviously help, but may not be possible. You would be surprised though at how much money you can save - and how much quicker you can pay off your mortgage - just by taking several small steps.
For example, consider what would happen if you put the following strategies to work on a $500,000 mortgage at 6 per cent interest over 25 years:
- Make weekly or bi-weekly rather than monthly payments.
- Increase the bi-weekly payment by $150 each
- Pay a lump sum of $3,500 (from income tax refunds) on the anniversary
None of these steps are too dramatic, but these small financial changes can have a pretty big impact. How big? They would allow you to retire the mortgage loan at least four years earlier and save you between $85,000 and $150,000 (approx.) in interest.
As you can see there are a variety of methods you can use to decrease your mortgage. The best choice usually comes down to what is easiest for you, and which approach you are likely to stick with. The important thing is to choose a strategy and try to stay with it. Here is a list of tricks that can help you become mortgage free sooner:
- Pay more frequently.
- Make lump-sum payments.
- Keep payments the same when rates fall.
- Raise your payments with your income.
- Put your tax refund to work.
Please feel free to call me to discuss ‘your' strategy!
Jerry Sims is a mortgage broker with Ambro & Associates Mortgage Consultants Ltd. with over 20 years of lending, banking and financial planning experience. A highly satisfied and loyal client base can attest to Jerry's knowledgeable, creative and caring service that rises above and beyond expectations. Jerry has worked at several financial institutions in the capacity of loans officer, branch manager and credit manager.
Please feel free to ask John for an endorsement if you would like to know more about my services.