Mortgage Tips

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Almost all mortgage borrowers want to pay off their mortgage as soon as possible but not everyone knows how. Most people will spend thousands of dollars unnecessarily by failing to take opportunities available to them to save money over the length of their entire mortgage.

Whether they stop or never start negotiating their interest rate at maturity dates, fail to shop around, unnecessarily pay higher- interest or pre-payment penalties or set up the wrong payment frequency, borrowers can find themselves paying a mortgage for a lot longer than they want to.

Most people want to be mortgage-free as soon as possible the minute they buy a home and get their mortgage.  A recent article published by The Globe and Mail explained that one in six people will refinance their mortgage each year and most of them will refinance the wrong the way. CMHC (Canada Mortgage and Housing Corporation) also noted that over fifty per cent of Canadians take paying off their mortgage debt seriously. Add these two things up, we certainly need to clarify reality.

As a mortgage broker, we can provide some very valuable tips and mortgage advice to help you accomplish the notable goal of paying off your mortgage early and freeing up cash flow.

For starters:

When you purchase real estate, you should always try to put a significant down payment towards your purchase price. High-ratio mortgage insurance can add many years to your mortgage along with interest payments which can equal higher monthly payments. This is because the insurance premium is added to the mortgage balance and included in the mortgage mortgage payment - you even pay interest on it!

Always add extra money to your mortgage balance. Whether you make a lump sum payment each calendar year or increase your payments, making extra payments will reduce your interest payments, decrease your mortgage balance and shave down your amortization period.

Change your payment frequency. Paying monthly is slowest way to pay your mortgage. What most people fail to realize is cutting your payment in half and paying every two weeks, can reduce your amortization period by up to 5 years. If you can, switch your payments to weekly, accelerated. The shorter amount of time in between your mortgage payments, the less interest has a chance to accrue.

Do some market research on both the variable rate mortgage and the fixed rate mortgage. Often, borrowers get hung up on the fixed rate without taking the time to look at historical data that suggests  the variable rate has always been cheaper and saved borrowers the most amount of money over time. Take advantage of lower interest rates and seek expert advice.

Always make sure you review and understand all mortgage options on the table. If you have thousands of dollars in credit card debt and are wasting money every month in interest payments, make sure you take advantage of refinancing and using a lower interest rate to get out debt sooner while also freeing up cash flow.

Always maintain your credit score, since without excellent credit, you won’t be able to obtain the most competitive interest rates with mortgage holders.