Loanerr is a Toronto-based financial technology startup that offers lending products, online mortgage rates, financial literacy advice and solutions with the average Canadian consumer in mind.
Mortgages in Canada are generally amortized between 25 and 35 year terms. While this seems like a long time, it does not have to take anyone that long to pay off their mortgage. There are many products on the market that give borrowers the opportunity to pay their mortgage off faster without comprising their finances.
With a bit of thinking ahead and some sacrifice, most people can manage to pay off their mortgage quickly by taking positive steps such as:
- Making mortgage payments each week, or even every other week. Both options lower your interest paid over the term of your mortgage and can result in the equivalent of an extra month’s mortgage payment each year. Paying your mortgage in this way can shorten your amortization period from 25 years to 21.
- When your income increases, increase the amount of your mortgage payments. Let’s say you get a 5% raise each year at work. If you put that extra 5% of your income into your mortgage, your mortgage balance will decrease and won’t leave you with a feeling of compromising disposable income or savings.
- Mortgage lenders will usually allow you to make extra payments on your mortgage balance each year. Just about everyone finds themselves with money they were not expecting at some point or another. Maybe you inherited some money from a distant relative or you received a nice holiday bonus at work. Consider applying this money to your mortgage lender as a lump-sum payment towards your mortgage. The results will more often than not be beneficial in truly owning your home, mortgage-free.
By applying these strategies consistently over time, you will save money, pay less interest and pay off your mortgage years earlier!