The Advantages Of Paying Off Your Mortgage Sooner
Some key things that could be done against your mortgage, would help to shorten the length of mortgage and lessen the cost of borrowing. The main advantage is that you would end up paying less for the expense of borrowing the money. You could free up money for different areas of your life, like for instance an emergency fund, education for yourself or your children and money for retirement.
One of the easiest ways to pay down your mortgage faster is to make more payments and to increase the frequency of your payments. It is wise to talk to your mortgage professional to have them explain to you the benefits of the amount you will ultimately save by making payments on a biweekly or weekly basis rather than on a monthly basis. The more frequent payment plan could end up saving you a lot in annual interest costs.
Paying the largest downpayment you could pay for is another great idea. This would help to reduce the time it would take to pay down the mortgage and reduce incurred interest costs of borrowing. If interest rates lessen when it comes time to renew your mortgage, you may want to think about keeping your payments the same and applying more money to the principal.
Most mortgages would allow the borrower to make a payment one time each year for as much as 20% of the mortgage. Prepayments and anniversary payments if made will directly go towards the principal. This would really save you a lot of money in annual interest costs. Some individuals choose to use their yearly work bonus or tax refund for this type of payment.
Other good options consist of making double payments when possible and lump sum payments whenever your financial situation allow.
When selecting a time frame to pay back a loan, a shorter length timeframe would save you money in the long run. When you next visit a mortgage professional, ask them to explain to you the breakdown of interest rates and payments on a 20 year amortization period as opposed to the longer 25 year amortization period. If possible, consider selecting a 15 year term. Even though your mortgage payments will be higher, you will end up paying considerably less in interest through the course of the loan.
Click to Download the pdf