A mortgage may seem like it’s never-ending, but there are some simple ways to chip away at it faster, bit by bit. A few hundred dollars here and there may not seem like a lot, but over the course of your mortgage (which for many is decades long), you’d be surprised at how much of a difference some simple changes over the term can make. Buyer be warned: Just make sure you don’t exceed the amount you’re allowed to put down any given period of time to avoid financial penalties.
Here are 11 simple & ingenious ways you can get rid of your mortgage even faster:
- Get a tax refund? Reinvest all or some of it into a balloon payment on your mortgage.
- Increase the frequency of your payments from monthly to bi-monthly, bi-monthly to accelerated bi-monthly or bi-weekly.
- Pay increase? Bump up your payments slightly and remember that even an increase as low as $10-$20 each mortgage payment will add up over time.
- Receive birthday or holiday money? Lump sum it into a balloon payment.
- Mortgage rates go down? Talk to a mortgage broker about whether or not renegotiating for a lower rate will help you pay off your debt sooner.
- Get a windfall? Unexpected bonus or inheritance? Make a balloon payment.
- Have money left over at the end of the month. This might not happen often, but sometimes you’ll have an extra $20, $50 or even a couple of $100 left in your budget. Slap that down on your mortgage.
- Put that extra pay cheque to work. Instead of splurging on those rare months when you receive three pay cheques instead of two, consider putting a little extra down on your mortgage.
- When (if) your emergency fund overflows a little, or that car repair you saved for comes in under budget, don’t just whittle the extra money away – put it onto your mortgage.
- If you have an investment that matures, consider whether or not it’s worth it to re-invest in another bond or GIC or making a balloon payment.
- Sell your stuff. Minimalism and purposeful living is huge right now. Jump on the bandwagon and sell some of your gently used name brand stuff that you never use to de-clutter and have a significant lump to throw on your mortgage.
What are your best tips for paying off your mortgage or other debt quickly?