How to be Mortgage Free Sooner

Learn several strategies on how to become mortgage free sooner and save thousands of dollars in interest. Pay off your mortgage sooner and retire faster.

We all want to be mortgage free and secure in our retirement. How much thought have you put into this though? Is it something you have considered in your long term financial planning? In your search for your first home? Or does it factor into your investments?  Chances are that it absolutely should, and we are going to quickly examine several ways you can pay off your mortgage more quickly, save on interest, and be set up for a more secure retirement and if you have retirement on your mind, have a read through our strategies for preparing for retirement.

Pre Payment Privileges

Each lender offers different pre payment terms, but most lenders offer prepayment privileges from 10% to 20% of the original mortgage amount. This can allow you to increase your payments and apply lump sum payments of up to 20% of your original mortgage amount every year.

This means on a $500,000 mortgage amortized over 25 years at a fixed rate of 2.5% your monthly payments would be $2243.08 per month and in 25 years you would be mortgage free.

If your goal was to be mortgage free as soon as possible there are a few things you can do.

Biweekly Payments

 Biweekly payments mean making 26 payments per year. If you switched from a monthly payment of $2243.08 and made a biweekly payment of $1,121.54 (half of the monthly payment), you would be mortgage free three years faster. You would also save $19,675.54 in interest.

Check out our indepth breakdown here

Imagine being mortgage free nearly 3 years sooner by simply making accelerated biweekly payments

But we are just getting started.

 You could be free from your mortgage 3 years faster and save almost $20,000 in interest, but we can do better.

Topping up your Payments

 If being mortgage free would be life changing and was your priority.

What would increasing your biweekly payments by $200 achieve?

By taking accelerated biweekly payments and increasing each payment by $200 you would shave off another 4 years off your mortgage and save an additional $20,390 in interest.

Topping up your biweekly payments could mean being mortgage free 7 years faster and saving over $40,000 in interest!

Accelerating your Retirement

Being mortgage free 7 years faster would mean an extra $26,917 to spend of save every year. Over the 7 years this would be an extra $188,419, talk about an impact!

If your mortgage was paid off 7 years faster would you be able to retire sooner?

Looking for the right product for your home purchase? Debating fixed vs variable? We would love to chat, you can also check out some of what we can help you with here.

Find out more

As mortgage broker’s we are on your team. Our job is to understand your needs, plans and wants in order to understand your mortgage needs. We then look at a number of lenders to find the best products and solutions for you.

During our time in the industry we have learned a number of tips and tricks to help you save money and to pay of your mortgage faster.

If you have any questions or would like a customized mortgage plan let us know!

More Posts

Racecar

Real Estate Investing, The Need For Speed

The “failure fallacy” cripples many investors and encourages growth until financial collapse. This sense of “failure” can be overcome by understanding the three phases of real estate investing and understanding the fundamentals of a great investment property.

ChessPieces

Optimizing the Smith Manoeuvre

A look at some of the strategies to optimize the Smith Manoeuvre and how you can benefit from the strategy without magnifying your investment risk.

Two Heads Emotion and Logic

Should you stay variable or go fixed?

Instead of losing sleep over interest rates move forward with a sense of clarity. A deep dive into the decision between fixed and variable rates. We look at how many increases it would take for variable rates to break even with fixed rates.

How to Prepare Yourself for Retirement header

Are Biweekly Mortgage Payments Better?

Biweekly payments can pay off your mortgage over 4 years faster and save you tens of thousands in interest. Imagine not having a mortgage payment… could you retire sooner? Travel? Pay for your family to go to university?

Placing savings into a piggy bank for retirement

How to Prepare Yourself for Retirement

Many Canadians plan to retire one day while having no plan in place. Without taking action and creating a plan most will not have the retirement they hope for. Its time to start making progress towards retirement before it is too late to change.