Pay down your mortgage faster
From the moment you make that first mortgage payment, you will probably be dreaming of the day when you can make your last one and be “mortgage-free.” For most people that day is pretty far off in the future, but it is possible to speed up the process. Your REALTOR will be able to advise you on ways you can pay down your mortgage as quickly as possible. This information will be helpful when you are arranging financing on your home. Be sure to discuss various options with your financial institution before choosing a mortgage. Amortization schedule For example, the most common mortgage amortization is 25 years. By shortening that period to 15 years, you will erode the amount of money you owe much more quickly and make fewer interest payments. Shortening the amortization period is not for everyone as it does mean larger payments, but for many people the benefit of long term savings is worth it. Usually each mortgage payment is blended and applied to both the principal and interest so at the beginning, the interest portion of the payment is extremely high. However, with each payment, more and more of is applied to the principal. Ask your REALTOR to give you examples of what your payments would be at the current interest rate amortized over 25 years as compared to 15 years. Payment options Anniversary date Your REALTOR along with either your bank, trust company or mortgage broker can help you look at all the possibilities for financing your home and can tailor a mortgage that fits your income and your goals. Shop around
This series of articles is brought to you by A. Mark Argentino and the Ontario Real Estate Association OREA as the source of information. |
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