Mortgages in Canada are generally amortized over 25 to 35 year terms. Nevertheless, with a little foresight and planning, and some sacrifice, most people can manage to pay off their mortgage in a much shorter period of time. Here are a few ways in which you can make this happen:
- Make mortgage payments weekly, or even bi-weekly. Both options lower your interest paid over the term of your mortgage and can result in the equivalent of an extra month’s mortgage payment each year which can take your mortgage term from 25 years down to 21 years.
- When your income increases, increase the amount of your mortgage payments. For example, if you get a 5% raise each year at work and you put that extra 5% into your mortgage, your balance will drop much faster without feeling like you are changing your spending habits.
- Mortgage lenders will allow you to make extra payments on your mortgage balance each year. Should you be lucky enough to find yourself with an unexpected windfall, apply it as a lump-sum payment towards your mortgage.
By employing these strategies consistently over time, you will pay less interest, save money and pay off your mortgage faster.