How to Pay Off Your Mortgage Faster
This is a question I get asked all the time. Sometimes at the settlement table, sometimes a few weeks later and sometimes by people just interested in retiring their debt.
There are quite a few ways to do this, short of winning the lottery!!
A mortgage is often the largest debt that anyone undertakes and as a result many home owners look to pay it off as soon as they can. Just remember when you pay off your mortgage you'll lose that interest deduction on your income tax.
Make bi-weekly mortgage payments - you have to set this one up with your mortgagor and not every mortgagor is set up to do this. Bi-weekly payments involve 26 half payments each year instead of 12 full payments. By making 13 full payments each year, you'll pay down the principal sooner and reduce the amount of interest you'll pay over the length of the loan.
Increase your mortgage payment - You can also increase the amount you pay towards the principal of the loan each month. Personally, this is the one I do. I look at my statement every month and pay as if I am making a late payment so that extra little bit goes directly towards the principal.
Make additional payments - If bi-weekly payments or increasing your monthly mortgage payment are not feasible, try to make extra payments when you can. If you have extra money at the end of the year, put it towards your mortgage.
Refinance with a shorter term mortgage - If you have a 30 year mortgage, you can refinance the loan for a 10, 15 or 20 year mortgage. While the payment each month will be higher, you'll be able to pay th eloan off much sooner.
These are just a few ideas and you may want to consult an accountant to see how retiring your mortgage debt will impact your financial situation.
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