Paying off your mortgage faster
Making additional mortgage payments
To pay off your mortgage faster, consider putting extra money toward your mortgage.
Your mortgage contract may allow you to:
- increase the amount of your regular payments
- make lump-sum payments
Your lender calls this a prepayment or prepayment privilege. Check your mortgage contract or contact your lender to find out about your prepayment options.
Increase your payments
Increasing the amount of your payments, even by a small amount, helps you pay off your mortgage faster.
You may only be able to increase your payments by a certain amount each year. Check your mortgage contract for the specific amount. If you increase your payments by more than your prepayment privilege allows, you may have to pay a penalty.
Normally, once you increase your payments, you can’t lower them until the end of the term. The term is the time that your mortgage contract is in effect including your interest rate and other conditions. The term can range from a few months to 5 years or longer.
Make a lump-sum payment
You can make a lump-sum payment on top of your regular mortgage payments.
You may only be able to put a limited amount of money toward your mortgage. Check your mortgage contract for the specific amount.
You can make lump-sum payments:
- before the end of your term
- at the end of your term
- at certain times during your term
- on certain dates set out in your contract
If you put more money toward your mortgage than the maximum amount allows, you will pay a prepayment penalty.
Read your mortgage contract carefully. Make sure you understand the details about penalties.
Keep your payments the same when changing your mortgage
When you renew your mortgage, you may be able to get a lower interest rate.
Some mortgage lenders may allow you to extend the length of your mortgage before the end of your term. Lenders call this early renewal option the blend-and-extend option. They do so because your old interest rate and the new term’s interest rate are blended.
When your interest rate is lower, you have the option to reduce the amount of your regular payments. If you decide to keep your regular payments the same, you can pay off your mortgage faster.
Choose an accelerated option for your mortgage payments
An accelerated payment option lets you make weekly or biweekly payments. With this option, you’re putting more money toward your mortgage than with a monthly payment.
Accelerated payments can save you money on interest charges. By accelerating your payments, you make the equivalent of one extra monthly payment per year.
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