How to Pay Off Your Mortgage Faster!

When it comes to homeownership, many of us dream of the day we will be mortgage-free. While most mortgages operate on a 25-year amortization schedule, there are some ways you can pay off your mortgage quicker!

1. Review Your Payment Schedule: Taking a look at your payment schedule can be an easy way to start paying down your mortgage faster, such as moving to an accelerated bi-weekly payment schedule. While this will lead to slightly higher monthly payments, the overall result is approximately one extra payment on your mortgage per calendar year. This can reduce the total amortization by multiple years, which is an effective way to whittle down your amortization faster.

2. Increase Your Mortgage Payments*: This is another fairly simple change you can execute today to start having more of an impact on your mortgage. Most lenders offer some sort of pre-payment privilege that allows you to increase your payment amount without penalty. This payment increase allowance can range from 10% to 20% payment increase from the original payment amount. If you earned a raise at work, or have come into some money, consider putting those funds right into your mortgage to help reduce your mortgage balance without you feeling like you are having to change your spending habits.

3. Make Extra Payments*: For those of you who have pre-payment privileges on your mortgage, this is a great option for paying it down faster. The extra payment option allows you to do an annual lump-sum payment of 15-20% of the original loan amount to help clear out some of your loan! Some mortgages will allow you to increase your payment by this pre-payment privilege percentage amount as well. This is another great way to utilize any extra money you may have earned, whether it’s from a bonus at work or an inheritance.

4. Negotiate a Better Rate: Depending on whether you have a variable or a fixed mortgage, you may want to consider looking into getting a better rate to reduce your overall mortgage payments and money to interest. This is ideally done when your mortgage term is up for renewal. Reach out to your mortgage broker — Lexi Muench about switching/transferring your mortgage to a new lender with a lower rate or better product for you! It could be a great opportunity to adjust your mortgage and save! 

5. Refinance to a Shorter Amortization Period: Lastly, consider the term of your mortgage. If you’re mortgage is coming up for renewal, this is a great time to look at refinancing to a shorter amortization period. While this will lead to higher monthly payments, you will be paying less interest over the life of the loan. Knowing what you can afford and how quickly you want to be mortgage-free can help you determine the best new amortization schedule.

If you’re looking to pay your mortgage off quicker, don’t hesitate to reach out to Lexi, a Dominion Lending Centres mortgage expert!!
She can help review the above options and assist in choosing the most effective course of action for your situation.

*These options are only available for some mortgage products. Check your mortgage package or reach out to me to ensure these options are available to you and avoid any potential penalties.
*Published by DLC’s Marketing Team

10 “Must Know” Credit Score Facts.

If you are in the market for a home or a new car, you are probably very familiar with your credit score. Lenders are one of the primary users of credit scores and it can have a huge impact on whether you get approved for a loan and just how much interest it is going to cost you. What isn’t well known about credit scores is where they come from, what makes them go up (or down!) and who else besides potential lenders uses them to make decisions. Your credit score is going to be with you for life, so why not take a couple of minutes to get the facts?

There are two credit-reporting agencies in Canada: Equifax and TransUnion. Your credit score may vary between the two. Lenders may check one or both agencies when you apply for credit.
Your credit score is actually derived from the data in your credit report — which can be had for free once per year from Equifax and TransUnion. Some banks, credit unions, and other financial services companies provide your credit score for free as part of their services.
Credit scores range between 300 and 900 with the Canadian average being 650.
Your credit score is used for a lot more than just borrowing money; insurance companies, mobile phone providers, car leasing companies, landlords and employers may all require your credit score to make decisions.
Five factors affect your credit score: length of credit history, credit utilization or how much of your limit you have used, the mix/types of credit you hold, the frequency you apply for credit, your payment history.
Mistakes and omissions are not uncommon and is a good idea to check the details of your credit report. Both agencies have a process to report errors and get them corrected.
Credit scores of 700+ are considered “good” and offer a higher chance of loan approval, greater borrowing limits, and lower or “preferred” interest rates and insurance premiums.
Credit scores are continuously evaluated and adjusted. If you have “errored” in your past, the damage is not permanent! Your score can be raised/rebuilt by using credit responsibly (see #10).
Checking your credit score regularly is a good idea and will help detect errors, monitor improvements, and identify fraud. This is a “soft” enquiry and will not affect your score.
To increase your credit score: make payments on time, pay the full amount owing, use 35% or less of your available credit, hold a variety of credit types, apply for new credit sparingly.
Don’t make the mistake of ignoring your credit score. Even if you aren’t looking to borrow money anytime soon, there are a lot of reasons to keep an eye on it.

As always if you have any questions about your credit score and what you can qualify for today – give me a call or send an email my way!
My cell number is 250-937-8474 or email leximuench@dominionlendingcentres.ca

Cheers!

Lexi Muench

Published by the DLC Marketing Team