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Are you hoping to pay off your mortgage sooner than 30 years? Luckily, it’s not impossible to reduce your payment schedule by years or even decades! With our secrets to paying off your mortgage faster, you’ll increase your equity and save plenty of money on interest payments.

Increase Your Payment

Did you know certain mortgage contracts in Canada allow you to increase the amount of your regular payments or make lump-sum payments? This is known as a prepayment or prepayment privilege. Talk to your bank to find out if your mortgage contract allows prepayment options. You can also increase your payments by a certain amount each year. But it’s important to check your mortgage contract to determine the specific amount because if you up your payments by more than your prepayment privilege permits, you could pay a penalty.

Refinance to a Shorter Term

Did you know that by refinancing your mortgage to half its original term, you’ll pay your mortgage off in half the time? Although your payments will increase they won’t double! That’s because shorter loan terms usually come with lower interest rates. Contact your bank to see if they will allow you to refinance before the end of your mortgage term. Then use an online mortgage calculator to crunch the numbers and see how much you’d be required to pay on a shorter-term. Even if you have to wait until the end of your mortgage term, when it comes to renegotiating, reducing the term by 5-10 years can help you see a significant difference.

Opt for Biweekly Payments

Opting for bi-weekly payments instead of monthly payments means you’ll make extra payments throughout the year. By paying biweekly, you’re making 13 full-sized payments annually instead of 12. You’ll be making a full additional payment each year, and it won’t make a big dent in your regular budget. However, it can help you pay off your mortgage much sooner. In some cases, it could reduce your mortgage by five years!

Use Your Tax Refund

If monthly payments are more manageable for you, you can still make the 13th payment at the end of every year. If you’re getting a tax refund or a yearly bonus from work, it’s a great idea to use the money to pay down your mortgage. Adding this lump sum won’t change your regularly scheduled payments, but when it comes time to renew, you’ll be happy you reduced the principal amount.

With these secret tips, you’ll be well on your way to paying off your mortgage faster, owning your very own home, and becoming debt-free! For more great advice, don’t forget to read the Falconcrest Homes’ blog.