Look for mortgages that allow a monthly payment increase or lump sum payments.
(PRWEB) September 20, 2012
There are several ways to reduce mortgage debt and pay-off a mortgage faster. Some of these variables include: interest rates, payment frequency, amortization period, and extra payments. By managing these factors, it will make it easier to get the most out of Canadian mortgages, pay the least amount of interest possible and most importantly, becoming mortgage-free.
Choose a shorter amortization period
The longer the amortization period, the more interest paid and the longer it will take to become mortgage-free. A shorter amortization period will make regular mortgage payments higher, as the number of mortgage payments is being reduced. If able to afford higher monthly payments, consider selecting a 15 to 20-year amortization period instead of a 25-year period.
Selecting biweekly mortgage payments instead of monthly or bi-monthly payments equals two additional payments each and every year. This may not seem like much, but over the course of a Canadian mortgage, it adds up. For a small change, biweekly payments produce big results.
Paying more on a mortgage is always a good idea; particularly since any additional payment will go directly towards paying off the principle and not toward interest – which immediately and significantly reduces the amount owing. "Look for mortgages that allow a monthly payment increase or lump sum payments," says Tammy Ezer of ComparaSave.com. "Many mortgages allow this annually to a maximum of 20% of the principle". Also, if looking to build up a retirement fund then consider contributing more to an RRSP account and using tax refunds towards your mortgage for double the benefit.
As mortgage rates fluctuate, consider refinancing your mortgage to lower your payments and reduce the amount of interest. While refinancing, it may be a good time to reduce the amortization period and save even more.
Put it all Together
By combining the above techniques – shorter amortization, biweekly payments, additional payments and refinancing mortgage rates – you can save a significant amount in interest costs and cut your mortgage repayment.
Online rate comparison services like ComparaSave.com make it easy for homebuyers to find the right mortgage rate; compare mortgage rates instantly from mortgage, brokers, credit unions and other financial institutions.
ComparaSave.com is a digital marketplace dedicated to helping Canadians save money by providing the lowest insurance and mortgage rates, as well as credit card and holiday comparisons, from a network of over 40 providers. Launched by Insurance Hotline, ComparaSave.com has partnered with insurance companies and brokers, mortgage professionals, credit unions and other financial institutions to ensure consumers get a fast, free and easy-to-use service. ComparaSave.com is a division of Insurance Hotline which is owned by Torstar Corporation, one of Canada’s leading media companies with business including the Toronto Star (Canada’s largest daily newspaper), Metro (Canada’s largest free daily newspaper), Metroland Media Group (publishers of over 100 community and daily newspapers), and Harlequin Enterprises, a leading global publisher of women’s fiction.