Pay your mortgage down quickly and you can save a ton of money on interest. Here are 6 tips to help you put a dent in your mortgage principal.
Most mortgages let you make prepayments without penalties. There are often restrictions on when you can make them and how much you can prepay, but you’ll generally have some prepayment opportunities. Take advantage of them!
Capitalize on a better interest rate
If your interest rate goes down at renewal, you have a chance to pay your mortgage down more quickly without hardly noticing. Keep your mortgage payments the same and you’ll actually pay more off the principal because less is going to interest.
Make your life changes matter
A lot can change in the span of a mortgage term. If your income has increased since the start of your last term you may want to increase the size of your mortgage payments. You may qualify for a lower interest rate if your financial position has improved. Renewal’s also a great time to make lump sum payments, because there are no prepayment penalties whatsoever.
Choose bi-weekly payments
Accelerated bi-weekly mortgage payments are a relatively painless way to squeeze an extra month’s worth of payments into each year.
Take advantage of a flexible mortgage – or don’t
An Affinity CU Flex mortgage gives you the flexibility to make prepayments with no penalties. Some conditions apply. If you take advantage of that opportunity you can pay your mortgage down more quickly. If you won’t take advantage of the prepayments, then a Straight Rate mortgage is probably a better option. Although it lacks in prepayment flexibility, it makes up for it with a lower interest rate.
Pick the right term length
The right mortgage term can make a big difference. Longer terms have higher interest rates, but the higher rate can be worth it if you’ve locked in and rates start going up. A shorter term lets you renegotiate your mortgage sooner to capitalize on a lower interest rate in case rates drop.