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27
Mortgage Financing: Mini Series - Part 4
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Mortgage Financing: Mini Series - Part 4
In Mortgage Financing: Mini Series - Part 1, we looked at Credit Bureaus. In Mortgage Financing: Mini Series - Par 2, we looked at Mortgage Terminology. In Mortgage Financing: Mini Series - Part 3, we explored Pre-Payment options the benefit of reducing your Mortgage burden quicker. Part 4 will deal with Pay Off Faster Strategies.
Mortgage Pay Off Faster Strategies
As the name implies, these strategies are aimed at paying off your mortgage faster. Although amortization is always based on 25 years, it is very beneficial to pay off a mortgage faster. For one thing, paying off your mortgage means you literally own your home or property quicker and thus are no longer liable to the bank. If you are able to lock-in a good interest rate, it is also better if you pay your mortgage off faster since you are taking advantage of a good rate and you will not be forced to renew at a less favourable rate. And, of course you can save thousands of dollars in interest payments over a long period.
- Strategy 1: Increase Frequency of Payments Simply changing the frequency from monthly to bi-weekly or from bi-weekly to weekly payments will save you thousands in interest on the long run.
- Strategy 2: Increased Payments By Increasing the regular payments amount, you will be contributing to principal faster and as a result, complete paying your mortgage faster as well.
- Strategy 3: Lump Sum Payments Lump sum payments are extra payments that you can make at the end of every year. Generally, 15% of total principal is allowed every year. Therefore, if you are expecting a tax return / refund, it is a great idea to use it towards your mortgage lump sum payment.
- Strategy 4: Shorter Amortization If you are able to handle the higher mortgage payments, why not reduce the overall amortization time frame from the begging and start with a shorter mortgage.
Pay Off Faster Strategies: Download the Pay Off Faster Strategies Printout.
Again, I wish to thank Linda Rudolph of TD Canada Trust for her help in compiling this information.
Linda Rudolph
Manager, Residential Mortgages
Telephone: (416) 282-1677
Fax: (416) 282-5299
Web: Linda Rudolph’s website here
For more information, contact:
Radu Medan
Sales Representative
Coldwell Banker Case Realty, Brokerage
416.250.9000
rmedan@trebnet.com
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February 27th, 2007
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