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Pay off the mortgage faster

Many homeowners are looking to pay off their mortgage as quickly as possible. Below is a list "Pay-Off Tips" to help you decrease your mortgage in an effective and consistant manner.

TIP #1: Increase your payment annually to the most you can afford. Most lenders will allow you to reduce it again to the previous level if it turns out to be too great a burden or your circumstances change.

TIP #2: Use your RRSP tax rebate to pay down your mortgage. Even if you can only prepay annually, make sure these funds are reserved for the purpose of applying to your mortgage. It can be one of those annual surprises that can really help reduce the principle.

TIP #3: Increase the frequency of your payments. Make accelerated bi-weekly payments to get a "free" principal reduction equivalent to one full mortgage payment every year — painlessly.

 

TIP #4: Round your payments up. By adding even a nominal amount of say, $10 per payment, the amount of interest you are saving will be unbelievable, and the extra money relatively painless to part with.

TIP #5: Pay a lump sum whenever possible. By decreasing the principal of the mortgage, your payments will not be allocated as much to interest in the future, thereby making you mortgage-free faster.

TIP #6: Keep payments the same when mortgage rates have fallen. If the payment amount has not been a problem so far, then do not change it when rates fall. Keep the payment the same thus paying down the principal faster.

TIP #7: Raise payments in line with increased income. If your income increases, don't keep your mortgage payments the same. Just pretend that your income did not increase and maintain your usual lifestyle.