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If you’re like many Canadians with a mortgage, you’re probably looking for ways to pay it off sooner. You’re in luck! Below are some great tips to help you reduce your principal and eliminate your mortgage debt faster, so that you have more money in your bank account for retirement, investments or a relaxing tropical vacation. If you’re among the 38% lucky homeowners who have paid off their mortgage, forward this information on to family or friends who are seeking to pay off their mortgage debt.
Making additional mortgage payments
To pay off your mortgage faster, consider putting extra money toward your mortgage.
Your mortgage contract may allow you to:
increase the amount of your regular payments
make lump-sum payments
Your lender calls this a prepayment or prepayment privilege. Check your mortgage contract or contact your lender to find out about your prepayment options.
Increase your payments
Increasing the amount of your payments, even by a small amount, helps you pay off your mortgage faster.
You may only be able to increase your payments by a certain amount each year. Check your mortgage contract for the specific amount. If you increase your payments by more than your prepayment privilege allows, you may have to pay a penalty.
Normally, once you increase your payments, you can’t lower them until the end of the term. The term is the time that your mortgage contract is in effect including your interest rate and other conditions. The term can range from a few months to 5 years or longer.
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
Choose an accelerated option for your mortgage payments
An accelerated payment option lets you make weekly or biweekly payments. With this option, you’re putting more money toward your mortgage than with a monthly payment.
Accelerated payments can save you money on interest charges. By accelerating your payments, you make the equivalent of one extra monthly payment per year.
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