How many years from now do you want to own your home free and clear?
As you may already know, 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. Even if you pay monthly and increase your monthly mortgage payment, any additional payments over and above your obligated payment will go direct to principle. Or you can make a lump sum payment which can realize savings several times as great over the life of your mortgage. Make sure your mortgage has flexible prepayment option. When you renew your mortgage upon maturity for a new lower rate and payment, keep the payment the same.
Home Power Plans and 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!
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