Three Ways to Pay Off A Mortgage Faster - Tips

A mortgage does not have to go on forever. According to experts, even if a long mortgage was signed up for, with payments scheduled to continue for a long time, there are ways to speed everything up.

1. Biweekly payments

Instead of making monthly mortgage payments (once a month), homeowners can ask their mortgage provider to accept biweekly payments, dividing the monthly amount in half.

This means that homeowners will be making 26 payments every year, paying down more than they would if they made 12 monthly payments.

The reason is that there are 13 four-week payment periods in a year, as opposed to 12 months, allowing two extra biweekly payments.

The advantage of this is that homeowners could cut three years off and save more than $16,000 by making biweekly payments instead of monthly payments on a 25 year mortgage for $300,000 at 3 per cent.

2. Rounding up

Another way to pay off a mortgage faster is relatively simple. Homeowners can make faster payments by rounding up their regular payment by a small amount, whether it is biweekly or monthly. If a homeowner's mortgage payment is equal to $575 every two weeks, they can consider rounding it up to $600.

With biweekly payments, homeowners will not feel the small additional amount in their regular budget and the savings over the years will be significant.

3. Extra payments

Another way to pay off a mortgage faster is to put in extra money that comes. This could be from a tax refund, inheritance or even a work bonus.

Homeowners can pay down an additional lump sum of money to a fixed percentage of the total mortgage, usually on the anniversary of the mortgage. However, homeowners should be aware that this option widely depends on the lender and their financial institution.

Reference:

The Globe and Mail

http://www.theglobeandmail.com/…/three-way…/article29296034/