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Reduce Mortgage Debt with These Tips
Many Canadians who have purchased a home will tell you, paying off the mortgage is one of the most remarkable steps towards a happy and financially stress-free retirement. Therefore, it should be a financial goal to reduce mortgage debt as fast as possible. Here are some helpful ideas to help you realize that goal.
You Can Refinance
Considering the condition of the mortgage market a few years ago, I would consider today’s rates as very competitive. If you refinance your mortgage now with lower mortgage rates, you can shorten the length of your mortgage.
Consider Short-Term Mortgages
Discuss with your lender about the amortization options available to see how choosing a shorter-term mortgage can affect your loan costs. Yes, payments may increase but the interest payable will decrease significantly in most cases.
Round Up Your Payments
Is your usual mortgage payment an odd number? By simply rounding up the payment to an even number, you can increase your annual payments and be able to pay up faster. The best thing with this approach is that you may not even feel the pinch.
Pay More Frequently (Weekly or bi-Weekly)
Most Canadian home buyers are familiar with this method because it has been there for eons. Accelerated payment helps you add a few thousand dollars at the end of the year. I am finding more people using the bi-weekly method and the results are a full month of payment at the end of the year.
Lump-Sum Mortgage Payments
If your lender permits it, you should consider making lump-sum payments for your mortgage. Note that different mortgage institutions have different prepayment policies, so it is advisable to refer to your agreement for the relevant details.
Surplus Income
If you find you have some surplus income, consider putting this ion your mortgage to help pay it down. This is a lot better than buying something you may not need as the money will be doing towards your investment in the property and not something random.
Occasionally, fortune may strike in the form of a few hundred dollars from unexpected quarters. By putting this money towards extra mortgage payment, you will help you pay down your mortgage faster.
Rent Out Some Space
Renting out a basement or guest room, even for just a few years as this can help to pay off your mortgage sooner and put extra money in your pocket.
It’s Okay to Downsize
You should consider selling things that you don’t need or use very often. You may be able to put a significant amount of money down on your mortgage this way. Selling your newer car, for example, to buy an older one can help you save some money and clear your mortgage faster.
Shop Around and See a Broker
You can get the best mortgage rates in Canada if you shop around. Speak with your local mortgage broker so you can compare mortgage rates and see what is out there on the current marketplace
Watch out for Prepayment Penalties or Fees
You should check the mortgage agreement to ensure there are no prepayment fees or other fees that you need to pay. Depending on your lender or mortgage type, some penalties may apply. Therefore, save you pain and disappointment by looking out for those extra prepayment conditions.
Summary
It is possible to reduce your mortgage debt load. All it takes is some simple changes on your part too have more money to put down on your mortgage. Get more great ideas about mortgage payment and to compare the best mortgage rates at CompareMyRates.ca.