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6 tips for paying your mortgage off faster




Can you imagine paying off your mortgage in just 12 ½ years?

Carol and Dave (names have been changed for the purpose of this post) of Vineland, ON, did just that, after “getting serious” about paying off their mortgage.

Here are 6 tips from the couple, who have two children and a combined family income of just under $100,000, for how you can pay off your mortgage fast.

1. Make weekly or biweekly payments
Making 26 biweekly mortgage payments instead of 12 monthly payments helps pay your mortgage off faster. The “extra” payments each year get applied directly to your mortgage’s principal, which reduces the interest owed in the long run. This may shave as much as a couple of years off your mortgage.

Use our mortgage calculator to see how much money you’d save by changing your mortgage frequency.

2. Increase your payments
Talk to your lender about increasing your payments annually, and do so when you receive your annual raise, pay off a loan, or meet another savings goal. “We began by increasing the payments to what we knew we could, an extra $100 per month or so,” says Carol.  

3. Make lump sum payments
Most mortgages allow some form of extra payments or prepayments without penalty. Carol and Dave applied income tax refunds to their mortgage, and took on extra odd jobs or overtime work for extra cash to pay down their mortgage faster.

Meridian Members have some of the best mortgage prepayment options for closed mortgages. You can make extra payments up to 20 percent of the original principal balance borrowed in each year of your mortgage term – without paying a prepayment penalty.

4. Track spending and cut costs
Carol says the first step to pay your mortgage off faster is to track where your money goes each month. “You can't do anything until you know what you have to work with-make a budget,” she says.

A budget lets you identify areas where you can cut costs to find money to apply to paying your mortgage off faster. Carol’s tip here is that, “Many small things can add up to a big result”.

5. Sell your unused things
Another way to find extra cash for your mortgage might be right under your nose. “Sell stuff you don't use or need,” says Carol. Take a look around your kitchen, basement, garage, and attic for clothing, baby items, and small household appliances to sell in your local print classifieds. Or sell your stuff online through Kijiji or even local Facebook swap groups.

6. Celebrate mortgage milestones
Even if you’re focused on paying your mortgage off fast, it takes time, so it’s important to stay motivated by celebrating your successes along the way as your mortgage balance declines. “Make a chart, or draw a picture of the house and colour it in as you pay it off,” suggests Carol. And stay motivated with some number crunching. “Figure out how much money you’ll save in interest by paying off you home sooner,” says Carol, adding that it’s easier to do something for a shorter period of time if the payoff is something you think is worth it.

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Now that their mortgage is paid off, what do Carol and Dave wish they’d done differently?

“The only thing we would change would be to start paying off more at the beginning of the mortgage instead of later,” says Carol. This means you pay more to the principal right away, so you pay less in interest over the whole amortization.

To learn more about your mortgage payment options for paying off your mortgage faster, visit a Meridian branch or speak to a Meridian Mortgage Specialist today.

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