These days of sunshine and beautiful temperatures make you think of parties? How about a mortgage burning party?
Okay, I know that sounds nerdy. Still, we all know that the faster you pay off your mortgage, the more you’ll save in interest and the faster you can build wealth. Building wealth is pretty sexy, right? And with bond and GIC rates at all-time lows, paying off the mortgage is pretty much the most secure investment you can make. This should appeal to more than just the conservative investors among us!
Here are 9 tips to pay off your mortgage sooner:
#1 Add a bit to your monthly payment.
Finding an extra $25 or $50 each month could shave years – and thousands of dollars – off your mortgage. Most mortgages allow you to increase your regular payment by 15-20% of the original amount each year.
#2 Make a yearly pre-payment.
Put a lump sum on your mortgage each year, using your tax refund or a bonus. There is a much greater impact when made early in the mortgage, but if you try to make at least one lump sum payment each year, you’ll see that mortgage disappearing super-fast.
#3 Choose bi-weekly accelerated payments.
Instead of paying monthly 12 times per year, pay 50% of the amount of the monthly payment, every two weeks. Since you’re actually making 26 payments rather than 24, you’re sneaking in a couple of extra payments.
#4 Double up.
Many mortgage lenders allow you to double up on your regular payment. Take advantage of this. Do NOT get sucked into the “mortgage vacation” or “skip-a-payment” marketing. The only one getting a benefit from that is your mortgage company.
#5 Increase your income? Increase your payments.
Just pretend your income didn’t increase, and put any extra toward your mortgage.
#6 Use money from financial gifts, freelance work, or part-time jobs.
Use this extra income to get you mortgage free faster, rather than splurging on luxuries or increasing your personal spending.
#7 Get frugal.
Shop around a little more to find ways to cut your phone, wireless or internet bill, borrow books and magazines from the library, cut out the lattes at the local coffee shop. Run a monthly tally on how much you saved, and contribute the money to your mortgage paydown account.
#8 Stay informed.
Don’t let your mortgage go on auto pilot. More than 65% of Canadians don’t bother to shop around at renewal time. Make informed choices when it comes to renewing your mortgage and take advantage of opportunities to improve the rate and the features of your mortgage.
#9 Look for inspiration.
If you don’t have people around you who can motivate you to find ways to get rid of that mortgage, check the web. Stories like How I Paid $100,000 Off My Mortgage in Two Years or How One Canadian Couple Managed to Pay Off Their Mortgage in Only 5 Years are super-inspiring. Maybe you don’t want to get quite as hard core as these people did, but you can steal one or two ideas that would work for you.
Looking forward to your mortgage-burning party some day? Share your best mortgage reduction strategies with me! I’m always on the lookout for new ideas to pass on to my clients.
And start planning that mortgage celebration!
Photo credit [c] Stuart Miles for freedigitalphotos.net