Become mortgage-free faster
It’s surprisingly easy to reduce your amortization – and the amount of interest you’ll pay. When you’re mortgage free, a big part of your budget will become available to help achieve your other financial goals.
Your mortgage is likely the largest debt you will ever take on, and reducing the amount of time it takes to pay it off, as well as the total interest, is an attractive notion. This article from Robb Engen shows three simple ways anyone can do just that.
Most mortgage agreements allow the home owner to pay 10-25% of the outstanding principal per year without a penalty. Engen suggests using "found money," such as a tax refund, to reduce the total amount of your principal. In turn, this will cut down on the total amount of interest you will pay over the long term.
Another easy way to shrink your mortgage faster is to increase the amount you pay each month. There are two ways to achieve this goal. Increasing your payments by a certain percentage is something most lenders allow, however be aware of fees if you decide to change it again in the same calendar year. Another way to increase your monthly payment is to switch your regular payments to an accelerated weekly or bi-weekly payment. It is a good idea to consult a mortgage calculator before making these changes to ensure they fit your budget. For more tips on becoming mortgage-free faster, talk to an Ottawa Mortgage Broker.