Pay your mortgage off faster.
The interest rate on your mortgage is likely the lowest loan rate you’ll ever be offered. This is because the debt is secured on an asset, providing the lender with leverage to recoup the debt should it fall delinquent. Therefore, if you have debts such as credit cards, loans, or even car payments, use the equity in your home to pay off those debts before focusing your attention on paying off your mortgage.
Once you’ve become unsecured debt free, it might be your goal to pay off your mortgage as fast as you can. Becoming mortgage free has become the ultimate financial goal for many Canadians. Below are a few things you can do to chip away at your balance and have your mortgage paid off sooner.
Accelerate your payments. By increasing your regular payment by $100 (or whatever amount you’re comfortable with), this amount will go directly towards the principal of the loan. Over time, you’ll have the loan paid down quicker and depending on how much you accelerate by, you might not even notice the extra funds leaving your account.
Make lump-sum payments. Each year, you’re allowed a pre-payment amount that won’t incur a penalty. If you receive extra funds such as a bonus from work or inheritance, you can dump those funds right on your mortgage and they will go directly towards the principal amount.
Round-up your payments. If you just want to accelerate your payment a little bit, you can round-up to the nearest dollar. Every little bit will help.
Refinance. If you obtained a mortgage when the rates were higher, it might benefit you to break the term, pay off the penalty, and take a lower rate. This would be up to you and your lender to determine if this would be the best decision on a case-by-case basis.
