Mortgages often have options that you can exercise to pay down your mortgage principle faster. Exercising these privileges will help you become mortgage free faster and save you money on interest. Some of the options that may be available to you are doubling up payments, increasing payments and making lump sum payments. .
Your mortgage commitment will outline what the maximum amount of each of these prepayment privileges can be used. Remember that any extra money you put on your mortgage will go directly towards the principle, no interest is charged on these payments. Your mortgage professional can work with you to outline how to use each of the privileges in your commitment so that you can save interest and pay your mortgage off faster.
Some of your Options may be:
• A double up payment is where you would double up the amount of your mortgage payment on a given payment date.
• Increasing your payment is where you can pay more than the minimum payment for each payment date.
• The lump sum payment is where you pay an amount of money on your mortgage at one time, this is typically once per year but check your commitment for details. People who receive bonuses from their workplace often exercise this option.
• Accelerated Payments is when you plan to make extra payments on your mortgage when you set it up. A bi-weekly mortgage payment will consist of 26 payments, if it is non-accelerated you will be paying 12 months of mortgage payments and if it is accelerated you will be paying the equivalent of 13 months of mortgage payments through those 26 payments.
An extra $50 per month has the capacity to save you thousands on your mortgage. Call us today if you want help figuring out how to use your prepayment privileges!