People always ask us what is the best way to pay down a mortgage quickly?

Well a mortgage is probably your largest debt and paying it off will give you peace of mind for sure, but it is usually a large amount of debt, and people tend to let it just sit there while making the agreed upon payments.

Think of it as credit card debt, the lender would love if you simply made minimum payment because we all know that usually just covers the interest.

Financially wise people realize this and make changes to attack that debt. You will have to make some sacrifice for sure, but ultimately it’s just a change to your mind set when it comes to the mortgage.

Who wants a debt hanging around for twenty to thirty years while paying enormous amounts of interest?

So here is how some people saved themselves money on mortgage interest and paid down their mortgage’s faster.

Of Buyers who purchased between 2014-2017:

18% made a lump sum payment (average was $19,500)

16% increased the amount of their payment (average was $440 a month)

10% increased their payment frequency

Based on this information it’s good to point out that most lenders allow consumers to increase their principal and interest payments anywhere from 15% to 20% of their original mortgage amount annually. A borrower can do this by increasing their monthly or bi-weekly payment amount and in addition they are also able to prepay up to 15% to 20% of their original balance in the form of lump sum payments (usually a lender will require a minimum $100 on any lump sum payment).

As mortgages in Canada are calculated by way of semi-annual compounded interest, remember that any prepayment goes directly to the principal owed and comes right off the top so to speak, so any amount of pre-payment made definitely is to your benefit.

So your probably thinking how can I do this?

Here are some suggestions:

Tax Refund– Before you spend that tax refund and buy that new big screen TV, just put it on your mortgage, sure take some mad money if you must, but making even a $1000 prepayment can make a huge difference in the long run and can shave of anywhere from 1 to 2 years in paying of your mortgage, can you imagine what you can do if you didn’t have mortgage payments, how much would you be saving. When you first got your mortgage you probably paid a lot of money every month, only to find it mostly went to interest and your actual payment to the principal was only a fraction.

Well think of it, you are making almost a whole annual payment in one fell swoop.

Change your mortgage payments – from monthly to bi-weekly, this change alone can decrease your mortgage amortization anywhere from 18 to 24 months, remember mortgages in Canada are calculated using semi-annual compounded interest.

Bump your monthly payment– Yes that hurts, but you are probably leaking money on non-essential spending anyway like…

Timmy’s Coffee- $3.00 a day.

Daily Lunch’s – Average $6.00 – $10.00 a day.

Restaurants- Average $50-$60 a meal.

Cellphone- Do you really need that new iPhone? Are you really on the best plan? Worth taking the time to check that out and take any savings and add that to your mortgage payments, you’re not out of pocket, your just using what you were paying to you cell plan over to your mortgage.

Family Vacations- $3000-take one sure, but book early, check travel sites for sales.

Take a look at where you are “leaking” money and make a choice to put that towards your biggest debt instead.

It’s not about denying yourself the pleasures of life, but be cognizant of where your money is really going.


Write down all your spending- for a week and I guarantee you will find some extra money.

Got something to sell– extra car hanging around, boat that isn’t getting used, snowmobile gathering dust? If you’re not using it, get rid of it and take that money and throw it on the mortgage. You won’t miss the money because you just had it tied up in something you were not using anyway!

In the end, it is all up to you, change your mindset, become involved and make small changes to pay of that mortgage sooner.

If you want help coming up with ideas or implementing a plan- we are here to help!

You will be glad you did!

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