Paying your mortgage off the traditional way takes 25 to 40 years and costs about TWICE the purchase price of your home. Here are some effective ways to pay off your mortgage sooner, build equity faster and save thousands in interest.
• Change your payments. Simply increasing your payment frequency to bi-weekly or weekly costs nothing and can save thousands of dollars over the life of your mortgage. If you can afford to pay a little extra, consider accelerated bi-weekly or weekly payments—these are equivalent to making one extra monthly payment per year which results in substantial savings. Or you can make a lump sum payment which can realize savings several times as great over the life of your mortgage.
• All-in-one mortgage. Instead of making extra payments, consider switching to a mortgage that pays off the principal faster without costing you anything more. All-in-one mortgages combine a line-of-credit mortgage with a chequing account to reduce interest costs and pay off your mortgage in as little as half the time, without changing your spending habits. You deposit your pay into the all-in-one account and pay bills as you normally would. While you’re not using your money, it’s used to reduce your daily loan balance. Over the life of the loan, this can save hundreds of thousands of dollars in interest!
• Merged account mortgage. If you’d rather not refinance your existing mortgage to switch to an all-in-one mortgage, consider a merged account mortgage. This system uses your existing mortgage (any type of first mortgage will work), an advanced line-of-credit (ALOC), and specialized software that makes a connection between your bank account, ALOC and mortgage. Each time you deposit income into your account, the software automatically generates an interest cancellation on your mortgage. The result is that a 30-year mortgage can be paid off in about 8 to 11 years, with no change to your lifestyle or refinancing of your existing mortgage.
To help decide which of these options is the best way for you to become mortgage-free sooner, call us today for a free analysis at 1-877-904-9222 or apply online at http://www.mrfinancial.ca