How Can I Pay Off My Mortgage More Quickly?

How can I pay off my mortgage more quickly? In short, the best way to pay off your mortgage more quickly is by reducing the amortization period. Is a low rate important? Yes – but amortization is far more powerful.  At Robert Floris’ Mortgage Architects Office, we always are competitive on rate. However, we enjoyed teaching how amortize Asian is much more powerful than rate in terms of saving money.

How Do You Reduce Your Amortization?

One simple way to address the question “How Can I Pay Off My Mortgage More Quickly” that doesn’t noticeably hurt your pocket book (do people use pocket books anymore?), is by increasing the amount of your payments. Just by increasing your regular payments by $50 each year can have a huge impact.

Here is an example:

• $300,000 mortgage
• 25 year amortization
• 3.25%
• Monthly payment of $1458.50
• Remaining amortization: 20 years

Now we are going to take the same example as above, but each year we will increase the payments by $50 for the 5 year term:

• Remaining amortization: 16 years and 3 months

By increasing the payments by only $50 per payments each year for the first 5 years, this mortgage is set to be paid off 3 years and 9 months sooner. That is 3 years and 9 months of payments that are saved (45 payments):

$1458.50 times 45 equals $65,632.50

Now you know how can I pay off my mortgage more quickly? Have a plan with your mortgage. Set your goals in terms of years, not rate!

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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