What You Can Do To Decrease Your Mortgage Debt Sooner
Wouldn't it be great to be mortgage free while you're still working? Can you imagine how great your retirement years could be? Dominion Lending in Edmonton has some great tips to help you decrease your mortgage debt sooner rather than later.
Change Your Payment Frequency
Many people opt to pay their mortgage payments monthly because it makes budgeting simple. However, If you change your payments to weekly or even bi-weekly, you will pay off your mortgage years faster than on the monthly payment system. The reason for this is simple: a significant portion of each payment goes towards the interest and the remainder to your principle. If you choose weekly payments, each of your payments will incur less interest because you will be putting money towards your principle more often. Even paying on a bi-weekly system will decrease your mortgage debt sooner.
Change the Number of Years You Amortize Your Mortgage Over
When it comes time to renew your mortgage, you can consult with Dominion Lending Edmonton to see if you can afford to shorten the amortization period of your mortgage. Most mortgages are amortized over 25-30 years, so if you can afford the higher payment, you might be able to reduce that to 20 or fewer.
Add a Little Extra to Mortgage Payments Every Month
It may seem insignificant but paying an extra 50 dollars a month can decrease your mortgage debt a lot sooner than you'd think. Since you pay less interest by paying more towards your principle balance, that extra 50 dollars can shave off thousands of dollars of interest. For example, on a $250,000 mortgage with payments of $1225 per month, making the payment $1275 per month knocks 1.5 years off. The interest savings by paying it off 1.5 years sooner is over $7,700. Your mortgage mentor at Dominion Lending in Edmonton can help you calculate your exact savings based on your current mortgage.
Use Pre-payment Options When Possible
Your mortgage terms and conditions should outline how much you can contribute as a pre-payment option or additional lump sum payment in each year. If you are unsure, your Dominion Lending Edmonton broker can help you with the numbers and the procedure for using this option. Consider using your income tax return, work bonus or another lump sum that is not part of your regular budget.
Don't Mortgage to Your Max Allowance
If you are pre-approved for a mortgage that would leave you with a payment of one thousand dollars a month, consider buying a home that would cost less and have smaller mortgage payments, but then increase your payment to a thousand dollars. The additional amount you pay gets applied directly to the principal of the mortgage. If you build in the higher cost immediately, before long you will be used to making that payment amount and won't even notice the difference until you're celebrating the end of mortgage payments years sooner!
These are a few of the ways you can decrease your mortgage debt sooner than later, without making any drastic changes to current financial situation. The savings add up very quickly even with seemingly small additional payments. Your mortgage mentors with Dominion Lending in Edmonton can help you secure a mortgage with great terms and conditions that allow you to become mortgage-free sooner than planned. Contact us today to learn more.Request Mortgage Info