Kelowna Mortgage Specialist
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Things People Need To Do In Order To Repay Their Mortgage Faster
One of the most major accomplishments which an individual could make is to own their own home outright. You will save more money on interest the faster your mortgage is paid off. You can take years off your loan by taking several simple steps which would help ensure you are paying off your mortgage as efficiently as possible. The best part is, this process is totally free.
1. The first thing you must do is shop around for the best mortgage you could acquire with your credit score. The ongoing service fees which the mortgage firm charges are usually reasonable, but it is wise to know precisely what fees would be charged before you sign on a loan. It may be in your best interests to consult a mortgage broker at this time.
2. Picking either weekly, bi-weekly, or monthly payments is the next step. A bi-weekly mortgage means that payments would be required 26 half-monthly payments instead of 12 monthly payments. Nonetheless, you will save a considerable amount on interest. It is essential to note that if your mortgage is originally set up as bi-weekly, your lender can charge you an upfront fee of $300-$400.
Like for example: if you make a payment of $415 two times a month rather than a monthly payment of $830, you will save about $27,000 in interest and can own your very own house approximately 4-1/2 years sooner.
3. The third step is to pay a little bit extra each month. Even a small increase of a couple of dollars would decrease the amount still owing on your principal amount. If you can pay an extra 10-15% percent every month then you will be in a good position to pay off your mortgage faster.
For example: By upping your payment from $830 to $1000 every month, you can save practically $48,000 in interest and pay off your loan 8 years early.
4. If you make a lump sum payment once a year, utilizing your tax refund, work bonus, or any extra money you have set aside, you can lessen the amount remaining on your principal by a significant amount. It is a great idea to check your mortgage documents to see how frequently you are permitted to prepay and in what amount in order to ensure that you will not be subjected to any added fees. Although most mortgage loans do not prohibit you from paying off your loan in advance, some loans do have parameters regarding any extra payments which you can make.
5. It is a good idea to pay off as much of your mortgage as you could at renewal time. At renewal, you could pay off as much as you would like as the majority of mortgages become open.
6. Make certain that you check your mortgage payment in order to ensure that your extra payments are being placed straight against the principal. It is vital that the bank accurately documents each and every payment which you make. Any additional payments that you make should be done utilizing a separate cheque. On the memo line, make sure you note that they payment should be applied to the principal only. At the end of the year, when doing your taxes, compute the payments and make certain that the entire amount which you paid has been accurately applied.
7. The final step to follow is to make certain that you are staying current and are informed about your mortgage. New products are coming out each year and the interest rate is always fluctuating. There is the possibility that you might want to shop around for a better product in the end.
Like for instance: You might only qualify for a lower-rate adjustable mortgage initially. At some point later on, you may decide to pick a more affordable, fixed-rate long-term mortgage.
There are some conditions where paying off your mortgage more quickly is not the best decision. For instance, some people might decide to invest in mutual funds when the yields return 10-12% each year. Normally, the majority of individuals decide to pay off their mortgage instead.
Another good time to avoid investing money is if you have plans to move in the near future. Saving your money and utilizing it for a down payment on your new home might be more advantageous then investing money into your current home.
By doing a little research and following these simple steps it is totally possible to save thousands of dollars on your mortgage. Nevertheless, the banks would not tell you how to save money because that will make them lose money and their profits will come to a standstill.
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