Tips On How To Pay Off Your Mortgage Quicker
Some important things which can be done against your mortgage, would help to shorten the duration of mortgage and lessen the cost of borrowing. The main benefit is that you will end up paying less for the cost of borrowing the money. You can free up money for other areas of your life, like for instance an emergency fund, education for yourself or your children and money for retirement.
Increasing the frequency of payments and making more payments is among the easiest and most effective ways to pay down your mortgage sooner. It is wise to talk to your mortgage professional to have them explain to you the benefits of the amount you would save eventually by making payments on a biweekly or weekly basis instead of monthly. The more frequent payment plan can end up saving you a lot in annual interest costs.
Paying the largest downpayment you can afford is another great idea. This will help to lessen the time it would take to pay down the mortgage and lessen incurred interest costs of borrowing. If interest rates decrease when it comes time to renew your mortgage, you may want to consider keeping your payments the same and applying more money to the principal.
Most mortgages will allow the borrower to make a payment one time every year for as much as 20% of the mortgage. Prepayments and anniversary payments if made would go directly towards the principal. This will save you plenty of money in annual interest costs. Some people choose to use their annual work bonus or tax refund for this kind of payment.
Whenever your financial conditions allow, it is good to make lump sum payments and double payments.
When selecting a time frame to pay back a loan, a shorter duration timeframe will save you money in the end. When you next visit a mortgage professional, ask them to explain to you the breakdown of payments and interest costs on a 20 year amortization period as opposed to the longer 25 year amortization period. If possible, think about choosing a 15 year term. Though your mortgage payments will be higher, you would end up paying considerably less in interest over the course of the loan.
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