After the 2010 foreclosure-gate that hit the home owners all over the United States, the homeowners in Canada also want the security and psychological advantage of having their homes free and clear. The dream of every Canadian is to become debt free for life, but it is much more difficult than it sounds. The key to becoming debt free is to pay off mortgage as quickly as possible. Here are a few tips and tricks that you can utilize to pay your house.
Sign up for 15-year fixed mortgage
The best way to pay off the mortgage is to sign-up for a 15-year fixed mortgage, but only if you can manage to pay higher monthly payments. This kind of mortgage will not only allow you to pay off your mortgage debt sooner but will also save you a lot of money in interest payments.
30-year mortgage plan
If you cannot afford to make the higher monthly payments of 15-year fixed mortgage, simply sign up for a 30-year mortgage plan and speed up the payback process to pay the debt early. To pay-off your 30-year mortgage loan early, make the payments on bi-weekly basis rather than typical monthly payments. The revised schedule will cut the total payment time by at least six years and save you hefty amounts as well in interest payments. There is no rocket science involved in this process, simply divide your monthly payment into two equal parts and start paying half every two weeks.
Set Up An Automatic Biweekly Payment Plan
To switch to biweekly plan, you need to inform your lender in advance and have your payment plan officially revised. Most banks and private mortgage lenders offer programs designed to mechanize the biweekly payment process; you simply need to make a phone call to your lender or go to their website and enrol yourself for the biweekly program. Lending companies that do not offer biweekly payment programs may charge you set-up fee equal to a few hundred dollars.
Get the Right Kind of Mortgage.
The above mentioned early pay-off plans may not work that well for you if you do not have the right kind of mortgage. It is highly recommended to stick to either of 15 or 30-year fixed mortgage with monthly or bi-weekly repayments you can afford.
Down payment also plays key role in helping you pay off your mortgage quickly. It is recommended to put down at least 20% of the purchasing price of your new home.