Make heartache and getting your dream home mutually exclusive
To be mortgage debt-free is the dream of most immigrant homeowners. While this might be less feasible in the short term, you can still pay off your mortgage earlier if you put the right strategies in place.
The word mortgage is originally French. It is derived from two words mort (dead) and gage (pledge). So in essence, a death pledge. Understandably, French speaking countries have an entirely different word – hypotheque- for what we casually call our mortgage.
However, a mortgage need not be a lifelong pledge. Here are 7 stress-free ways to pay off your mortgage loan faster:
1. Make mortgage payments bi-weekly
Most homeowners pay monthly, so it adds up to 12 mortgage payments per year. But if you make half-sized payments every two weeks, you’ll make 26 half-payments per year — the equivalent of 13 full payments.
Essentially, it is like making 13 monthly payments every year rather than the usual 12.
Whenever you make any extra payment, however, be sure to designate it “apply to principal.” Otherwise, the lender may treat it as a prepayment of your next regular monthly payment.
Paying down your mortgage faster should not cost extra.
2. Throw all your extra cash into your mortgage
Dedicate every windfall you receive — such as bonuses and gifts — toward your mortgage principal.
To make this happen, you need to bd proactive and intentional because needs have a magical way to catch up with money even before it comes.
3. Round up your payments
Get in the habit of rounding up your monthly payment. If it’s $1,013, pay $1,020 or even $1,100.
Do this on a regular basis, and you’ll shave years off your mortgage while feeling little pain.
4. Make one extra payment a year
This is an alternative to making a payment every two weeks. At the end of the year, give yourself a holiday gift by making an extra payment.
Or, you might prefer to just add an amount equal to one-twelfth of your mortgage payment to each month’s payment. For instance, with a $1,013 monthly payment, one-twelfth is about $84. So, you’d pay $1,097 monthly instead.
5. Refinance into a shorter loan
Interest rates are generally lower on shorter-term loans than on longer-term loans. So, borrowers choosing shorter terms — such as a 15-year mortgage instead of a 30-year mortgage — can save a great deal of money in the long run, although their monthly payment will likely increase.
6. Make a lump-sum payment
You can make a lump-sum payment on top of your regular mortgage payments.
You may only be able to put a limited amount of money toward your mortgage. Check your mortgage contract for the specific amount.
You can make lump-sum payments:
- before the end of your term
- at the end of your term
- at certain times during your term
- on certain dates set out in your contract
Use the Mortgage Calculator to explore your payment options.
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Apply these strategies in paying off your mortgage faster, and reduce the stress over your most valuable asset.
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