11 Nov 2013 / by Iain / in Vancouver Mortgage Blog
Tips for Paying Off Your Mortgage Payment Early
Buying a home is a really exciting experience for people. Making a mortgage payment for the rest of your life is not as exciting of a prospect for you. This is one of the many reasons why people would like to pay off their mortgage payments as early as possible. Since this is not as easy as just cutting a check, there are methods that are acceptable by the bank and will allow you to maintain your budget in the process. Here are a few tips to help you in paying off your mortgage as soon as possible.
Pay an Extra Month
A normal mortgage cycle is 12 payments in a year. However, you can work out a payment schedule with your bank which allows you to pay your mortgage every two weeks rather than every month. This means that instead of making 12 monthly payments (24 half payments), you are paying 26 half payments. The additional two half payments equals a full month payment you have towards your principal by the end of the year. This can assist you in paying off your mortgage at least a year in advance of where you might normally have paid it off. This is a huge savings.
Pay Additional on Your Mortgage
Another choice you have when making your payments is simply to add some money to your mortgage payment. The issue you will have when you first start making payments on your mortgage is the payments are going mostly towards the interest payments rather than towards the principal. By spending just a little more on your payments every month, you will have the mortgage paid off even sooner. Just make sure you can afford the extra payments whenever you make them so you do not throw off your budget.
Refinance Your Mortgage
If you have a high interest rate, you might consider refinancing your mortgage. This will allow you to spend less money on your mortgage every month. At least, this will reduce the amount you are obligated to pay every month. If you are able to still make the payments at the same rate, you will now be paying directly towards the principal with the additional amount. While this will not constitute a huge difference in your mortgage, because of the closing costs, it will make a difference. If you are close to the end of your loan, this will not save you a lot of money.
Get a Mortgage Broker
The great thing about a mortgage broker is not only can they help you to find a bank willing to give you a loan, but they can help you to save money too. They shop the different lenders for you to find out which ones have the kind of mortgage which is right for your budget and will help you to save money in the end. Typically, you will save on your interest rate as well as reducing your closing costs when you are using a mortgage broker to help you.