Let’s talk about one way you can pay your mortgage off faster.
Mortgage Amortizations can seem like a life long goal to pay off. The struggle is real but today we’re going to talk about how you can pay it off quicker and save you some money in interest.
Most people focus on rate and yes, rate is important but without a stratagie, it’s not going to help you pay off that loan any faster or avoid payment shock at the end of your mortgage term. Payment shock is when you’re used to a low rate and then when you are up for renewal you’re not be prepared for a higher mortgage payment…we want to help you avoid that.
So how can we do all of this?
Let’s assume your mortgage is $500,000 and your rate is 1.55% (though variable is not right for everyone we are going to use a variable rate for this example to show with stratagie this can be a great option)
$500,000 mortgage amount
30 year amortization
$868.21 accelerated bi-weekly payments (If you decided on a fixed rate you could expect a rate of 2.34% and those payment would be $965.58)
So we are going to start off on day one making a payment based on the fixed rate but taking a variable this means that you will be using your pre-payment options to make additional payments to your mortgage.
Day one your payments will be $965 bi-weekly
This means in year one you will make an additional $2,516.54 in additional payments
It will be effortlessly and your normal from day 1
Then in year 2 we will increase your bi-weekly payments by $50 (consider this your extra coffee or drive thru money)
Most of us receive annual increases in salary however we never increase our mortgage payments
Year one your payments will be $965 biweekly
Year two $1,015 bi-weekly
Year three $1,065 bi-weekly
Year four $1,115 bi-weekly
Year five $1,165 bi-weekly
This means that at the end of your term you are making payments equivalent to a rate of about 3.80%. You will have paid down your mortgage by an additional $25,000 without blinking an eye. It was systematic and effortless. You will then have a renewal balance of approximately $396,448 INSTEAD OF $422,826
Now your at your maturity, what do you do? Do you auto renew? Absolutely not. As mentioned in our last post, you will most likely not get offered the best option. You connect with me and together we work out a new strategy for your coming term. We will continue to pay your mortgage off faster utilizing your pre-payment privledges to the fullest and I will find the best mortgage product for you.
Now there you have it..That’s just one strategy to help you pay your mortgage off faster.
Want to discuss your options,
Connect with me and I’d be happy to help.
Until next time, have a great week