The dream of owning a home typically isn’t possible without having a mortgage. But staying informed, understanding all your options, and developing a sound strategy for paying off your mortgage is easier than you think. For example, having a discussion with a Scotiabank advisor to discuss ways to pay off your mortgage as soon as possible can be key to your financial success. From selecting the shortest amortization period, to making a lump sum pre-payment, here are four ways you can pay off your mortgage faster.
Switch to bi-weekly payments
Many Canadians are likely making monthly mortgage payments, but making the switch to a bi-weekly or weekly cycle can help in reducing interest costs while shortening the amortization period.
Make extra payments
While many Canadian homeowners have fixed regular mortgage payments, it doesn’t mean you can’t contribute additional payments now and then depending on the prepayment privileges of the mortgage*. Using unanticipated or “found” sources of money (work bonuses, birthday cash, or tax refunds) and applying them to pay down your mortgage can help reduce the overall amortization and speed up the payment process.
Using the “round up” payment system
When it comes to paying off your mortgage, doing it quickly is often the name of the game. One way to achieve this is to round up to the nearest hundred when making your fixed payment.* If your regular payment comes to $478, for example, round up that amount to $500. Doing this can be a relatively pain-free method of chipping away at the mortgage principal faster.
Shrink your amortization schedule
In general terms, mortgages often are amortized — the number of years it will take to repay the mortgage loan in full — over a 25-year period. But shrinking that amortization time-frame can help cut down the interest paid over time. While selecting a shorter amortization schedule will increase the regular payments made, it will help save cash in the long run.
These are four easy ways that Canadians can potentially pay off their mortgage more quickly. Every homeowner is unique and identifying the mortgage plan that’s right for you and your family is key to success. To make this process a bit easier, sit down with a Scotiabank advisor today to help make your mortgage-free dreams a reality.
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*Subject to the prepayment privileges available under the mortgage.