Want to pay your mortgage down? Know your options
Do you want to be mortgage free? Who doesn’t? However, as with all things financial, wishing will not make it so. You can take a serious chunk out of your mortgage debt, but you’ve got to develop a strategy and stick to it over the long term.
Need extra motivation? Think of all of the “fun” things you could spend that mortgage payment on (or you pad up your savings too). Oh- and don’t forget that you’ll own a house outright at the end. Can you say real estate baron?
If you’ve not read your fine print on your mortgage agreement, now is the time to do it. Better yet, set an appointment with a non-profit credit counselor. Together they can help you put together a plan that will take advantage of prepayment options offered by your bank, as well as maybe helping you find extra cash in your budget to pay down your mortgage.
What are your options?
Most lenders let you make a lump sum payment annually (sometimes on your anniversary date, sometimes other dates). Other features include match a payment or doubling up on payments, all done without penalty.
The idea here is to avoid interest charges in overpaying your allowed prepayment funds and to direct as much towards your mortgage loan principal.
When are you up for renewal?
As rates have been ultra-low for a long time, chances are you already have a sweet rate deal to start with. However, rates have dropped in the last few months, so you may stand to get an even better deal. If your mortgage is coming up for renewal in the next few months, start shopping now and get yourself a rate guarantee (most lenders will give you one 120 days in advance).
Don’t be afraid to ask for discounts and to get banks working against each other. If they are going to get your business, they’ve got to work for it!
Also, when your mortgage comes up for renewal is a great opportunity to lay down extra money without interest penalty. You can shave that debt down even faster!