Simple Steps to Clear Your Mortgage Debt Faster
A mortgage is likely your largest expense, so it makes a lot of sense to free up money by paying it off if you can.
Following are some easy ways to help you clear your mortgage debt a lot sooner:
- Make a pre-payment each month. Get a copy of your loan amortization schedule or go to an online calculator.
- Plug in some numbers, including an extra payment, to see how much you will save.
- If you’re going to pre-pay, do it early in the mortgage. The interest on mortgages is heaviest at the beginning, so getting that down in the early years is a good strategy.
- Make an annual lump sum payment. Most mortgages have an annual pre-pay option, which can be up to 20% of the principal.
- Pay bi-weekly and add an extra payment each month.
- Stay on top of mortgage rates. You might be able to refinance at a lower rate while still maintaining the same payment, thereby reducing the principal more quickly.
- If you plan on moving, it’s probably not a good idea to pay off your mortgage. Put that extra money into a higher-yielding financial product like a mutual fund.
Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).