Good news! It only takes small changes for you to become mortgage free and save thousands of dollars in interest. In December, Mortgage Professionals Canada released its annual state of the housing market report and found that in 2015, 36% of homeowners took actions to reduce their mortgage debt. Here’s how you can do the same.
You may think of simply making lump-sum payments, but there are other ways you can save money on your mortgage including:
- Renegotiating for a lower interest rate
- Switching to accelerated weekly or bi-weekly payments Increasing your regular payment
- Lump-sum payments
DID YOU KNOW: Increasing your payment by just $20 a month can have a positive impact because the extra money is applied directly against the mortgage principal decreasing the amount of interest you will pay over the life of the loan.
Annual or periodic lump sum payments: You may make lump sum payments of 10% to 25% of the original principal amount each year.Increase your payment: You may also increase your current payment by up to 15%, 20%, or even 100% each year.
Double your payments: Some lenders also offer the option of doubling any and all payments.
Accelerated payments: With a weekly or bi-weekly payment option you may switch to an accelerated payment whereby you apply a small incremental amount of money directly to the principal. This payment is designed so that every 12 months you make the equivalent of 13 payments.
Here is an example that shows you how much you can SAVE by simply increasing your payment frequency over the term of your mortgage. Figures have been rounded off.
Let me help you save! The freedom that being completely debt-free brings is a dream for many Canadians. If you’re unsure of what your next step should be, let’s talk. Together we can review your mortgage, look at your financial picture and devise a mortgage-reduction plan that works for you.