Can you pay off your mortgage quicker?

Every mortgage and every home owner is different. The one thing everyone has in common, however, is wanting to pay off their mortgage faster. If you can pay off your mortgage more quickly, this opens up your financial freedom and the opportunities that come with it. If you plan on paying off your mortgage on high speed, however, take a moment to slow down. First, you need to understand your options for clearing your mortgage faster, and what to watch out for. Here are the top strategies!

Shorten your amortization schedule

Your amortization period represents your mortgage payment plan and timeline. It is a schedule that determines when you must make payments, how big they need to be, and how long it will take to pay off your mortgage completely. For many home owners looking to reach this end goal faster, the logical place to start is with your amortization period. You may be able to shorten it, which means you would be making larger payments more often. Over time, this speeds up the payment process and gets you to the end of your mortgage quicker. In the long run, this can also save you money, as you will be cutting down on the interest you owe with each installment.

The big thing to consider with this strategy is your ability to take on a bigger financial burden. Not only will your payments be larger, but they will also take place over a shorter period of time. It’s important to think about your current financial situation, and whether you are in a place where you can take this step to pay off your mortgage faster.

Up the frequency of your payments

Some home owners have the option to make payments more frequently without having to shorten their amortization period. Depending on your mortgage terms, you may have prepayment privileges that allow you to make payments more often than what is required in your contract. Of course, more frequent contributions means chipping away at your mortgage at a faster pace than if you were to stick to your schedule. If you were to make payments twice a month instead of once, for example, you could theoretically pay off your mortgage twice as fast. Of course, there are limitations to making prepayments, which we will discuss later.

Put extra funds toward your mortgage

If you come across money you didn’t necessarily plan for and aren’t sure what to do with it, putting it toward your mortgage can be a great use for it. You might get a work promotion or bonus that lands you some extra money, for example. Perhaps you gain an inheritance, or you receive a generous tax return. If you don’t have any outstanding debts or urgent use for this money, it’s worth considering using it to help pay off your mortgage. Every payment gets you one step closer to conquering your mortgage and owning your home free and clear.

Always discuss with a broker first!

The absolute best way to ensure you are paying your mortgage off as fast as possible is to consult your mortgage broker. While it may be tempting to start making fast and furious payments right away, this could be a mistake if not done properly. Many mortgage contracts have limitations on just how often you can make a payment, and how much you can pay at a time. This is for lenders to ensure they are still earning interest on their loan to you. Breaking the rules in your contract can set you up for some hefty penalties. In the long run, this will not help you pay off your mortgage at all. Work with your broker to discuss your goals, and they can help you understand your options. Your broker is here to get you the best deal, so we recommend following their advice throughout the entire mortgage process.

Everyone wants to pay off their mortgage as soon as possible, and we want to help you get there too! However, it’s essential that you pause and take the time to chat with a broker first. Otherwise, you might find yourself owing money in penalties and slowing down your progress. The world of mortgages is complicated, but we are here to make it simple. Feel free to reach out to us for all your homeownership and mortgage needs!

If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.