Canadians are taking advantage of these simple strategies to reduce their mortgage debt and saving themselves a lot of money. Now is the time to act so you can take advantage of these simple strategies.
One of the easiest ways is to go on a bi-weekly or weekly payment option. Did you know that by going with either one of these payment options you can reduce a 25 year mortgage down to 22.4 years. If you are paying monthly then you should call your lender and have them change to either bi-weekly or weekly accelerated. Make sure you ask for accelerated.
The other option is lump sum payments or increasing your payments. Every lender will allow you to increase your payments or you can put a lump sum down each year. These amounts range from 15-20% of the amount financed. So if you borrowed 200k you can put up to 40k per year against your mortgage without any penalty to yourself. Also you can increase your monthly payments from 15-20% which will also allow you to pay off your mortgage quicker. So can you afford an extra $50/month on your mortgage payments? If so take advantage and enjoy mortgage freedom sooner.
Refinancing to a lower interest rate. We are currently seeing a low interest rate environment. As of this writing 5 year fixed rates are as low as 2.59%. If you have a rate higher than 3% then it will be worth your while to review a refinance. Even though you will incur a penalty it may still make sense to refinance to the lower rate. A simple calculation will determine if it makes sense at this time. Also if you have the equity you can look to consolidate other debt into your mortgage.
If you are mortgage free or have a lot of equity you may also want to look at using your equity to invest. Did you know that you can write off the interest incurred against your income to save on your taxes. This is a great strategy that will turn borrowed funds into a good loan and lets your equity work for you.
These are some of the strategies that can be implemented.
If you’re unsure of what your next step should be, let’s talk. Together we can review your mortgage, look at your financial picture and devise a mortgage-reduction plan that works for you.
Eric Gall is the owner of Avanti Mortgages (operating as a mortgage broker for TMG – The Mortgage Group Atlantic). If you are purchasing, refinancing or renewing your mortgage contact Eric or check out his website and apply online. If you are a First Time Homebuyer then get your free report here. If selling/refinancing a home get your free report here to avoid some common mistakes.