One question I get a lot working with mortgages is, “How can I pay my mortgage off faster?” When you’re locked into a twenty five-year mortgage, the thought of paying it off early is certainly appealing.
But of course, it is in the lender’s best interest to keep you on the hook for as long as possible. Then again, most lenders understand that your imperative as a home owner is to pay for your home, and then maybe make some other large purchases, like a cabin or a place down south to escape from the winter. As such, there are some easy ways to go about paying off your mortgage faster without paying a penalty.
Many lenders will allow you to increase your monthly or biweekly mortgage payments on a short-term or, in some cases, a long-term basis. For example, if your monthly mortgage payments are $1,000, you can add anywhere from an extra $1 up to an extra $200 onto those monthly payments. This extra amount goes directly to the principle and allows you to chip away a couple years off your repayment period at least.
Here’s an example if you paid an extra $100 per month on a $200,000 mortgage:
Some other lenders we use allow you to make annual lump-sum payments up to 20% of your principal, which can speed up the rate at which your mortgage is paid off dramatically. This is sometimes double what some major lenders allow. Say you have a mortgage of $200,000. Under this plan, you can put a $40,000 lump sum payment onto your mortgage, on top of your monthly payments, once a year. This is certainly something to consider if you get a substantial raise at your job, or you come into some money. If you’re able to do this a couple years running, you’ll save thousands, and suddenly your mortgage is nearly paid off!
If you have any questions about how you can pay your mortgage off faster, give us a call. It’s our job to help you through the mortgage process, and that doesn’t just end once you’ve signed your mortgage papers. We’re happy to help make all your real estate dreams come true, while saving you as much money as possible.
Office: (204) 727-2177
Cell: (204) 720-4002