Even if real estate is considered to be an investment and not a form of debt, it is tempting to want to reimburse your mortgage rapidly. Have you taken the time to calculate how much interest your property will have costs you once you will have finished paying it off? The total may make your head spin! This is why come people wish to settle their mortgage as soon as possible. But how? RE/MAX is here to offer you some suggestions.
Pay More Than the Minimum
Did you know that at any moment you can make an extra payment on your mortgage? An interesting option if you have received a work bonus or an inheritance. There is sometimes a maximum amount above which you will have to pay additional fees, although these are not usually high. However, remember that there is no reason to wait to have amassed a large amount. You can ask your financial institution to withdraw a surplus that will be directly applied to the capital, reducing the total interests paid. Even if you only add 20 dollars a week, it will make a difference. Psst! Because lenders collect more interest at the start of the mortgage term, it is even more advantageous to make additional payments in the first years.
Choose a Shorter Term
A few years ago, borrowers could spread their mortgage payments over 30 years. Now the longest term is 25 years. Why? Because it was discovered that, among other reasons, people with limited financial means burdened themselves with debt by becoming homeowners. Moreover, the longer the mortgage term, the greater the amount of interest paid, the more expensive the home. If your budget allows, choose a 15-year or 20-year term instead of 25 years.
Change Financial Institution
When the time comes to renew the mortgage contract, don’t hesitate to check out what other lenders have to offer. To gain a customer, some are ready to make interesting financial proposals. Also, did you know that you can break your contract even though there are many months left before the end of its term? If a financial institution is offering you an interest rate that is lower than your current one, it may be worthwhile to pay the penalty and switch lenders. Take out your calculator!
Repay Weekly, Not Monthly
Do you believe that there is no difference between weekly and monthly mortgage payments? This is not true! At the end of the year, the homeowner who opted for weekly payments instead of monthly ones will have reimbursed a greater proportion of the mortgage. The reason is simple: they will have made 52 payments against 48 (for the monthly option). Four additional payments will not impact your budget, but they will reduce the duration of the term. Brilliant!