Getting out of mortgage debt
In this post we are going to review some possible ideas to help you with paying down your mortgage a little faster. The CBC in November reported of an individual that was able to pay off his mortgage in 3 years to be Mortgage debt free. Now this is a bit extreme for most to achieve. The goal here is to help you find ways to pay more and help pay it off a bit faster.
Here are five ideas with potential to yield quick wins against mortgage payments.
The More We Make, The More We Spend
It’s an easy trap to fall into, you get a big raise, and as consequence the make more expensive purchases, such as a new high end car, the latest and best electronics. These are tempting purchase items for many.
The best option to getting out of debt faster, especially when getting a raise, is to put that extra cash into paying down your debts. Look at increasing your mortgage payments. Try to avoid spending that extra cash on items that are not really needed. Look to paying your expenses/debts and working towards being debt free.
Matching Payments with your Pay Schedule
If you are currently being paid bi-weekly, but you are making monthly mortgage payments, look at switching over to biweekly. When paying bi-weekly, you can either split your payments so you are paying the same amount every year, or pay one half your monthly payment every 2 weeks. By paying the same amount but paying more frequently, you reduce the interest charges by a small amount that will save you a modest amount over time and reduce the time it will take to repay your mortgage. Splitting your payments in half and paying that amount every 2 weeks gives you the interest benefits of paying bi-weekly but it also allows you to make two extra payments per year which goes directly to reducing the mortgage balance owing. This is called an accelerated bi-weekly payment. This can help to shave years off of your mortgage.
Transportation Options and Food Cost
After housing costs, transportation and food are the two areas where Canadians spend most of their money, and these are the two areas where most can make some cutbacks and help trim their spending.
If you have an automobile that is a gas guzzler, you can look at getting an automobile that is more fuel efficient. Another option is to see if anyone in your area is carpooling, or you can look into using the transit system. One thing to remember is that even small changes can add up after a while.
With your groceries, reviewing the weekly flyers for this week’s specials, many have online flyers that you can check at any time. This helps especially for price matching. Keeping an eye out on the specials, and price checking can help with saving more.
Taking that extra time to research all the possible Mortgage companies and/or getting a great Mortgage broker can help you find the best deal for you. The experience and advice from your Mortgage broker can help you make the best decision for you and your end goals.
If you like to put lump sum amounts towards your mortgage payments, then you can look at getting a mortgage that allows you to do this (with no penalty). This is helpful for those that like to put their tax returns or work bonus towards their mortgage.
When your Mortgage is up for renewal, don’t take the easy way out and renew, take this time to talk to your Mortgage broker and see if there’s a better deal out there for you.
Borrowing Against Your Home
If you borrow against your home equity, it will take you longer to pay off your mortgage, and this increases the amount in interest payments that you will be paying as well.