Daniel
Whether you’re searching for homes for sale in Calgary to find your dream home, or you’re finally ready to buy a second home or a vacation home, you’re probably wondering if you could perhaps pay your mortgage loan off sooner than the set loan term.
Even if you can comfortably afford your mortgage loan repayments, the interest repayable typically adds up to a nauseating total at the end of the loan term. For this reason, it’s wise to find ways to pay off the loan sooner because you’ll effectively cut out a large amount of interest.
But how can you pay off your mortgage loan sooner without upsetting your financial stability?
Increase Your Monthly Repayments
Increasing your monthly repayment amount is an effective way to cut back on interest and pay off your loan a lot sooner. This approach typically works best with fixed-rate loans, and it’s an excellent option if you aren’t able to refinance your loan.
While most lenders will accept an additional payment, be sure to consult your lender first to determine your options.
Balance Transfers
Consult your lender to discuss whether or not they can offer your a lower interest deal. If not, you can consider a balance transfer, in which you switch lenders and transfer your balance to the new bank.
Shopping around for a new mortgage loan is also an effective way to cut back on your total interest owed to a lender because some lenders charge less interest.
Make Biweekly Payments
Another effective and money-savvy way of paying off a mortgage loan sooner is to make biweekly payments instead of monthly payments. With this approach, you’ll end up paying 26 annual payments, which means you’ll cover an extra month simply by switching up your payment frequency.
With this, you’ll shave off a substantial amount of interest and pay the loan off substantially sooner.
Make An Additional Lump Sum Payment
Suppose you happen to come into a bit of extra money, whether a work bonus or even vacation pay, you could decide to make an additional lump sum payment into your mortgage loan to reduce the total substantially. This approach can effectively reduce your total interest owed and reduce your loan term as well.
Consolidation
Consolidation is when you merge multiple loans into one single loan. Often, a consolidation loan can shave off a substantial amount of interest because all loans are merged, a single lender settles your accounts, and you’re only obligated to pay off one loan amount.
But you’ll need to shop around for the lowest interest rate on a consolidation loan to get the best value with this approach.
There are several ways to reduce your mortgage loan term and cut back on the amount of interest owed to the lender. However, it’s critical to evaluate all the relevant options before making a decision. Some might find consolidation is the most suitable solution, while others might agree that switching to biweekly payments is the best approach for their pocket.
