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3 Strategies You Can Use Right Now to Pay Your Mortgage Off Faster

pay your mortgage off fasterPaying your mortgage off faster will put you in a comfortable financial position that much sooner. While chipping away at such a large loan amount may seem daunting, the truth is that with a little know-how and a reasonable amount of persistence you can start shaving years off your mortgage right now.

Paying Off Your Mortgage Loan Faster

Mortgages are driven by compound interest. And that means the faster you pay down the original amount (the principal), the less interest you’ll pay overall and the sooner you can pay off your loan.

Here are 3 strategies you can use to pay your mortgage off faster.

1. Make Extra Mortgage Payments a Priority

Every extra mortgage payment you make over and above your regular payments attacks your loan principal. Use a mortgage calculator to better understand the impact of making extra payments like these:

  • Try rounding up your mortgage amount each month – from $1368 to $1400, for example – for a relatively painless way to make extra payments ($1400 – $1368 = $32 extra each month x 12 months = an extra $384 in payments each year).
  • Take things up a notch by dividing your regular mortgage amount by 12 ($1368 monthly mortgage payment ÷ 12 months = $114 extra each month) and adding that to each monthly payment for the equivalent of one extra mortgage payment each year (you can achieve the same result by switching from a monthly to a biweekly payment).
    • For example: $1368 monthly mortgage payments + $114 extra each month) = $1482 per month
  • Set a goal to make one extra mortgage payment each quarter for an even bigger impact on your principal ($1368 monthly mortgage payments x 4 payments each quarter $1824 per month and $5472 in extra payments each year)

You should also make a point of increasing your mortgage payments – or making a lump sum payment – every time you get a raise, receive a bonus, or score a tax refund.

Important: Before adopting strategies like these to pay your mortgage down faster, check with your lender about any rules they may have for making extra payments.

Some financial institutions, for example, will only allow additional payments at certain times while others may charge a prepayment fee. You should also confirm that any extra payments you make will be applied directly to your mortgage loan principal.

2. Take in Renters to Help Pay Down Your Principal

Some homeowners generate extra money they can put toward their mortgage by renting out space in their homes. Depending on your property lay-out – and the bylaws in your neighbourhood – you could opt for a long-term tenant, or limit your rentals to Airbnb. Either way, the extra money will help you pay off your mortgage faster.

3. Refinance to Get Out of Debt Faster

Mortgage refinancing often results in a lower interest rate that yields lower monthly payments. But by keeping your payments the same, you’ll pay your mortgage off faster. Alternatively you may be able to pay off your mortgage faster by shortening the term of your refinanced mortgage and adopting higher monthly payments.

Why a Second Mortgage Loan May Be a Valuable First Step

The general rule of thumb for paying off debt is to address your most expensive loans first. So before you start overpaying your mortgage, you should consider getting rid of any high interest credit card loans you may have.

Getting a second mortgage in the form of a home equity loan from Alpine Credits can be a valuable strategy for consolidating multiple high interest loans or credit cards into one comparatively low rate loan payment.

Not only does Alpine Credits make it easy to get money from your home regardless of your age, income, or credit, our debt consolidation loan can rid you of certain debts faster so you can get back to paying off your mortgage.

At Alpine Credits, Homeowners Get Approved.

Apply now or call (1-800-587-2161) to find out how you can subscribe for RESP through your home equity.