Tips to Pay Off Your Mortgage Sooner

Client's often don't realize the cost of principal and interest, and how it multiplies over the course of a mortgage - often amounting to more than the initial home purchase price.  The fact is, taking even the smallest steps now will make a HUGE impact in the long run.  

The following are some easy tips to be "mortgage-free, sooner:"

1. Accelerate your payment frequency.

• Choose a bi-weekly accelerated payment.  Instead of making 24 payments a year, you will make 26 - which can take off up to 6 or more years from your payments.  Accelerated weekly, even faster.

2. Amortize frugally.

• If you can afford higher payments, choose a shorter amortization period. 

3. Make lump sum payments.

• Making a $1000 prepayment in the first year on a $300 000 mortgage will save more than $4 500 in interest in the long run.  And making $1000 prepayment every year will produce long-term savings of over $50 000 and take off four and a half years off the amortization period.

4. Adjust your payment.

• If your term is nearing its end, right now interest rates are at "near-historic lows," now may be the time to increase your monthly/bi-weekly/weekly payments.  Every little bit helps.

As you can see, these are very simple, small steps that move you forward on your payments, so you can put your mortgage behind you!

These tips were taken from the Invis Home & Mortgage Magazine, "Tips for Reducing Interest Costs," edited by Ajay Soni & Steven Moyes. Volume 1 Number 1/2010.  Check out www.invis.ca for more information.