Own a Home, Not a MortgagePay Off Your Mortgage Faster and Own a Home Sooner
For many homeowners, the biggest question is "How can I pay off my mortgage as fast as possible?"
It's natural to look forward to the day when you have made your very last mortgage payment and own your home outright. Owning your home provides you with greater financial freedom, flexibility and the ability to focus on other financial goals like retirement or saving for your child's education.
It doesn't even have to be that hard - you'll be amazed how small changes in your mortgage terms and payments can make a big difference. Here are some simple strategies to help you become mortgage-free faster and easier:
- Make your regular mortgage payments more frequent: Save interest and become mortgage-free sooner by choosing bi-weekly or weekly payments rather than monthly payments. This will have the effect of making an extra monthly payment every year, without even noticing it.
- Choose the shortest amortization period and the largest payment amount you can afford: Slightly higher payments will quickly become a routine budget item and can take years off your mortgage.
- Increase your payment amount when you can: If you've had a mortgage for a while, you're likely used to the routine of making regular payments. Now might be a good time to consider if you could afford to increase your payment a bit. Also, whenever your household income rises (eg. salary increase, new job, etc.), consider increasing your mortgage payment at the same time.
- Match-a-Payment®: To help pay off your mortgage sooner, you can double your current mortgage payment of principal and interest on any regular payment date. This additional amount will go directly towards your principal without any fee or penalty*.
- Make a lump sum payment: Take advantage of the prepayment privileges on your mortgage to make an annual lump sum payment against your mortgage. Depending on the options you select for your mortgage, you can choose to repay up to 10%, 15% or 20% of the original principal amount of your mortgage at any time during each year of the term. Remember, even small amounts can make a big difference in the long run.
- At renewal, if your interest rates have decreased, keep your payments the same:When you renew, your principal balance is probably less and your renewal may indicate a lower payment amount if rates have dropped. If that is the case, then increase the payment to what you were paying before. This extra amount will be applied directly to your principal, helping you pay off your mortgage faster.
- Diversify your mortgage: Consider mortgage options that can provide savings and flexibility. Just as you would diversify your investments, you can also mix and match your mortgage terms and choose from fixed and variable rates.
For example, the Scotia Total Equity® Plan** allows you to combine the features of fixed and variable rates to take advantage of potentially lower short term rates and also protect against future rate increases. Similarly, you could combine a short-term fixed mortgage (eg. one-year term) and a longer-term fixed mortgage (eg. five-year term) to create a mortgage solution that is a blend of both.
These are just a few suggestions to discuss with your Scotiabank Advisor. You can also see the savings for yourself by experimenting with different payment scenarios using our Mortgage-Free Faster Calculator.
The Match-a-Payment is not available during an interest-only portion of any progress draw construction mortgage and may not be available depending on the mortgage solution you select. Other conditions may apply.
Some mortgage solutions may not be eligible to be included as part of a Scotia Total Equity Plan.