When it takes decades to pay off our mortgage, we start to wonder if there are any shortcuts.
The first one that comes to mind is, of course, to increase the amount of our monthly payments.
However, once you increase your payments, you are not normally allowed to lower them until the end of the term.
RENEWING YOUR MORTGAGE … THE RIGHT TIME
At the end of the fixed term, you must renew or renegotiate your mortgage. If you renew at a lower rate, you could reduce the remaining duration of your mortgage by maintaining or increasing the amount of your monthly payments. Slightly higher payments can result in significant savings on interest. This is a good opportunity to take advantage of the situation and pay off your mortgage faster.
You can also take advantage of prepayments which are lump-sum payments that you can make in addition to your regular mortgage payments, before the end of your mortgage term, and in particular, when renewing a mortgage. The prepayment reduces the outstanding balance and is another way to pay off your mortgage faster.
There are various accelerated payment options: by choosing one of these options, you can budget about the same amount of money to your mortgage each month and save. Most financial institutions offer several payment frequency options: monthly, bimonthly, biweekly or even weekly.
Accelerated weekly or biweekly payment options can save you a lot of money in interest charges since you’ll pay off your mortgage so much faster.
In short, the sooner you act, the less you will pay in long-term interest and the faster you will get rid of your mortgage.