Twenty-five or thirty years is a long time to repay a loan. To pay off your mortgage faster, here are some tactics to get you on the road to financial freedom that much sooner.

1) Make a Double Mortgage Payment: A double monthly payment once a year will save you interest and will reduce a 25 year or 30 year amortization by approximately 3.5 or 4.5 years respectively.

2) Increase Your Payment Frequency: Changing your mortgage from monthly to bi-weekly accelerated payments will have the same effect as doubling up your monthly mortgage payment.

3) Lump Sum Payments:  Many lenders allow up 15 to 20% of your opening mortgage balance to be applied as a lump sum payment each year.  Annual work bonuses are a great option for this.  Lump sums can nicely bring down the interest costs and the time it takes to repay your mortgage as well.

4) Increase Your Payment:  A one-time 10% increase can shave four to five years off your mortgage. If you bumped the payment 10% every year, you would be mortgage-free in approximately half the time of your original amortization.  You could also consider increasing the payment by the amount of your annual raise should you receive them.

5) Make an RRSP Contribution: Looking for a way to find the funds to make a lump sum payment?  Consider making an RRSP contribution and using the income tax refund to pay down your mortgage.

6) Set Up Automatic Savings: Set aside a little each pay period.  When your extra savings reaches the amount of one mortgage payment, apply it to the mortgage.

7) Renegotiate When Rates Drop: Revisiting your mortgage is a good idea when rates drop. A 1% reduction on a $500,000 mortgage could save you approximately $24,000 in just 5 years.  Check with me to see when this might make sense for you.

In any case, these are just a few of the ways to repay your mortgage off faster.  Contact me to see how some of these may affect your interest savings. I’m always happy to help.

Adapted from DLC Marketing

Photo Credit: Pietro di Grandi  – Unsplash.com