Is the excitement of buying your new home being overshadowed by knowing you have 25 years of debt and mortgage payments? Financial freedom may seem like a far off dream but you could make it a reality like Toronto author, Sean Cooper, who paid off his mortgage in just 3 years (Read Sean’s story here) Feeling inspired? Check out these tips and contact your mortgage broker, to discuss how to you can slash years off your mortgage, reduce how much interest you pay and enjoy financial freedom sooner:
Accelerate Your Payments
Check if you can make any extra payments to your current mortgage without a prepayment penalty. A common accelerated method includes doubling up on your monthly payment every quarter. Also, see if you can pay bi-weekly as opposed to monthly, this will allow for two extra payments a year.
Round Up your Payments
This easy solution can take years off your mortgage – simply round up your payments! You can easily turn a $2155 payment into a $2200 payment with little shock to your bank account. It’s a small amount that can make a big difference.
Make a Lump Sum Payment
Most lenders allow you to make yearly lump sum payments to your principal balance. Try to apply your next tax refund, bonus, or raise to your mortgage payment. You can also arrange for any dividends or bond maturity payments to go into your mortgage instead of being reinvested.
Increase Your Payment
Again, most lenders allow you to increase the mortgage payment once per year. The increase in the payment is applied directly against the principal balance. A small increase makes a big difference to the amount of interest you will pay and the amount of time you will have the mortgage.
Shorten the Amortization Period
You can reduce the interest and focus on paying back that principal faster by shortening the Amortization period. I can assist you to refinance your mortgage to a shorter amortization period. Your monthly payments may be higher, but you will pay a lot less in interest which will slash years off of your mortgage.
Refinance to Lower Your Interest Rate
When the interest rates are rock bottom and there are several years left on your mortgage, it’s worth attempting to get the best refinancing rate possible. Talk to me as this change could result in massive savings year over year. You can then turn around and put more money directly into the principal.
Short-Term Sacrifice for Long-Term Gain
Sean Cooper wiped out his mortgage at age 30 by making sacrifices in the short-term in exchange for long-term financial freedom. What was his secret? Among other concessions, he moved into the basement of his new home and rented out the upper portion of the house. That rental income went straight to paying his mortgage. If you are willing or able to make a similar concession with your own home such as bringing in a housemate, you could pay off your mortgage much sooner and save thousands in interest in the long-term.
Don’t lose sleep over your mortgage payment. Contact me today to find out what options are available to you, and you could see financial freedom in your future sooner.