Do you know about all the options available to pay off your mortgage? Learn about the mortgage options and repayment plans that will let you get rid of your mortgage debt and own your home sooner.
Opt for an Open Mortgage
A fully open mortgage will allow the borrower to repay the mortgage in whole or in part at any time without penalty. It’s important to note that an open rate mortgage will come at a higher rate. But if you know that your cash flow will increase and you’ll be able to make lump sum payments, this option can help you pay down your mortgage principal much faster.
Periodic Payment Increases
Another way to pay off the mortgage faster and save money in the process is to increase the payment amount. This option lets the borrower increase the payment, in many cases, up to 100% of the original payment amount during the term of the mortgage. It’s also important to note that the sooner you increase the payment, the better. Increasing the payment later in the mortgage cycle will save you money but will have a less dramatic impact.
Lump Sum Payment
By making a lump sum payment, the amount will get directly applied to the principal amount. And just like the periodic payment increase option, the earlier the lump sum payment, the more significant it will be.
Combining Lump Sum Payments and Periodic Payment Increases
If you can make a lump sum payment early in the mortgage process and then periodically increase the monthly mortgage payments over the lifetime of the mortgage, you will experience significant savings.
You can also request to increase your payment before the first payment begins. By increasing the mortgage payment to an accelerated monthly or weekly payments, you will be making the equivalent of an extra monthly payment per year. Over the lifetime of the mortgage, this can save you tens of thousands of dollars and help you pay it down faster.
There are many ways to pay down your mortgage faster, but it’s important to understand what options are available and best for you. If you’re getting ready to purchase, we can help you find the best mortgage option with terms that will let you take advantage of the above money saving techniques. If you already have a mortgage, we’ll review your current terms and conditions to find all the ways that you can pay it off sooner and save money in the process. Contact us at The Mortgage Advisors today!