Have you thought about your mortgage lately? For those who were already approved and have signed on the dotted line, it’s likely that it doesn’t come to mind very often, besides ensuring that you don’t miss a payment. If this is the case, you may be missing out on potential opportunities for you and your family to get ahead. Here are three mortgage moves that could help you get ahead and achieve your financial goals.
Make lump sum payments
Ahhh, to be mortgage free! It sounds like a dream, right? Although it’s definitely possible to pay down your mortgage early, it does take quite a bit of determination and focus. One way you can work towards this goal is by making lump sum payments.
When you make a lump sum payment, you’ll basically put a certain amount of money towards the principal of your mortgage loan. Not only does this mean you may be able to pay down your mortgage more quickly, it also means that you will likely save money in interest payments or even potentially lower your monthly payments – although you may need to ask for a mortgage recalculation for that to happen.
A lump sum payment may not work for everyone, however. It depends on the type of mortgage you have, as well as the terms of your mortgage agreement. If, according to your mortgage agreement, you have these prepayment privileges, you’re free and clear to make a lump sum payment. However, if you don’t have such privileges, you may run into prepayment penalties that can mean that those lump sum payments are prohibitive.
Another smart mortgage move to make involves switching your current payment system to an accelerated bi-weekly payment structure. This type of payment structure is becoming more and more popular with many households, as it allows you to put more towards your mortgage and pay your mortgage down more quickly. In fact, it’s been shown that switching to this type of payment structure can help you reduce the length of your mortgage (amortization) by several years.
Deal with debt
Maybe you’re feeling great about your mortgage payments, but not so great about the amount of household debt you currently carry. Debt can definitely be a tricky thing to deal with and there are many debt relief options that are available to help you pay it down.
If you have a lot of equity in your home, you may want to consider using that equity to put towards paying off your debt more quickly. This is a particularly good idea if you carry a lot of debt with a high-interest rate attached, such as credit card debt. Refinancing your mortgage will allow you to use the equity you have in your home to put towards paying down the debt, which will not only help you save money in interest payments, it also means that you’ll be free from your consumer, non-mortgage debt.
Not sure if these mortgage moves are the right ones for you to make? As an experienced mortgage broker in Barrie, Ontario, I work with a variety of different clients to find the best mortgage solution tailored to their individual needs and circumstances. Connect with me today at 705-315-0516 and we can discuss your needs and the solution that will help you get ahead.