It’s not just the type of mortgage you select that determines how much you will pay, both monthly and over the life of your mortgage…
Paying Down Your Mortgage Faster
It pays to know your choices. Each of the following options is designed to help you build your home equity faster and save money over the life of your mortgage:
Consider doubling up on your payments. With doubling up on your payments, your payment goes directly towards reducing the principal balance of your mortgage. You can:
- Prepay up to the principal and interest portion of your mortgage payment on any or every payment date.
- Pay up to the equivalent of your regular monthly mortgage payment, whether it’s whether, biweekly, or monthly.
Make Principal Prepayments
Applying principal prepayments directly to your mortgage principal allows you to:
- Prepay up to 10% of the original amount of your mortgage once in every 12-month period.
- Make a principal prepayment at renewal time for any amount you wish.
A principal prepayment of even $2000 a year can make a sizeable difference in the time it takes to pay off your mortgage.
Increase Your Payment Amount
Once every 12 months you can increase the amount of the principal and interest portion of your mortgage payment by as much as 10% without any prepayment charge. The increased amount goes directly toward your principal.
Mortgage Add-On Option
At some point, you may wish to take on a larger expense such as a home renovation or a child’s education. The mortgage add-on option lets you borrow additional funds against the equity you’ve established on your home so you can fund that expense. You can borrow up to 90% of the appraised value of your home minus your mortgage balance. Your new loan is added to your existing mortgage balance. It’s an easy and convenient way to finance large expenses and consolidate your debt. Ask your mortgage specialist for details.
If you’re thinking of moving and prefer the interest rate on your current mortgage, ask your mortgage specialist about your mortgages portability. If your mortgage is portable, it will allow you to transfer your existing interest rate, plus all the terms and conditions of your current mortgage to your new home.
Alternately, if you need more money to pay for your new home, your new mortgage can be increased and your existing rate blended with the current rate to obtain a weighted annual interest rate. Ask your mortgage specialist for details.
Your existing mortgage can be an attractive feature for prospective buyers. If your mortgage rate is significantly lower than the rates at that time, you may wish to consider allowing your buyer to take over your mortgage or “assume” it.
Please note that a buyer can only assume your mortgage if they meet the usual mortgage qualification requirements and if you decide not to take your mortgage with you to your new home.
Life and Disability Insurance
While it isn’t mandatory for you to carry life and/or disability insurance, they are highly recommended. If you have life insurance and you die, the balance of the mortgage is paid in full. Of, if you become disabled, a set number of mortgage payments can be paid for you.