If your mortgage renewal is coming up, here are some factors you may want to consider.
Prepayment - A pre-payment option allows a payment of up to 10% or more of the total original principal pwing, in addition to regular mortgage payments. This opportunity usually occurs on the anniversary date of your mortgage. You may be able to divide the amount and pay it in two installments over the course of a year, or you may be able to double up your monthly payments without penalty, according to the Canadian bankers’ Assoc. But of course, the best thing you can do is to discuss with your lender which options you may have available to pay your mortgage faster.
Get The Best Rate - The lower the rate, the faster you can pay off your mortgage. It pays to shopw around in today’s mortgage market. Be aware that the lowest interest rate isn’t necessarily the best choice if it restricts you from some of the other options outlined here.
Frequency - You can pay off your mortgage faster by accelerating payments. Some lenders offer weekly or bi-weekly payment options. Over the life of the mortage, paying weekly or bi-weekly rather than monthly can make a big difference on the amount of interest paid.
Increase payments - If you can afford it, many lenders allow you to increase your regular mortgage payments. Even a small increase, such as $25 a month, could cut years off your mortgage.
Amortization Period - Every time you renew your mortgage, consider shortening the amortization period. you’ll have larger payments, but the results will be worth it!
Michelle Hourd - REALTOR® - Century 21 Fusion