Depending on your lender it’s likely you have the option to make pre-payments up to a certain amount on your mortgage. Taking advantage of these pre-payment privileges means paying off your mortgage faster without being penalized. Pre-payment privileges can be used through increasing your regular payment or making lump sum payments. It’s important to keep the percentage of just how much you’re able to pre-pay per year in mind, as going over that eligible amount can cost you in penalties.
Increase regular payment
You’re able to increase your regular payment anywhere from 10%-100%. When increasing your regular payment, you’re eliminating more off the principal of the loan which in turn lowers the life of your loan.
Lump Sum Payments
Making lump sum payment will not only decrease the amount of interest you’re paying but it will shave years off the life of your mortgage! Lenders allow anywhere from 10% – 20% pre-payments of the balance of your mortgage per year.
More Ways for Paying Off your Mortgage Faster…
Increasing the number of payments you make a year on your mortgage will assist in paying off the principal of your loan much faster. If you’re paying your mortgage bi-weekly, try increasing that to accelerated bi-weekly. If you’re paid bi-weekly and the odd month you get paid 3 times instead of 2, your mortgage payment will follow that schedule as well, knocking years off your mortgage loan.
Same Payment on lower Rate
If your mortgage is coming up for renewal and they offer a lower rate than you’re currently getting, ask to keep your payments the same. This way you’re putting more towards the principal of the loan, plus it’s no change to your regular payment making it easy to keep that budget on track!
Contact your Mortgage agent to lean more about paying off your mortgage faster.
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