SmartHomeOwners

If you are in a debt-free financial position where you can pay off your mortgage more quickly without sacrificing other aspects of your life, there are a few ways to accomplish this. Although lenders make their money by getting your monthly interest out of the mortgage, they usually allow you to pay some extra money each year. However, before you do any of the following, you will have to consult your original mortgage contracts or your bank to see what you can and cannot do.

Here are the five ways to get out of your mortgage faster:

1. Increase your payment frequency. Bi-weekly mortgage payments have become increasingly popular as a way to pay off your mortgage more faster. The accelerated option provides an even better choice for those who can afford it than the bi-weeky.
2. Make lump sum payments. Depending on the terms of your mortgage contract, you may be able to make lump-sum payments. Some banks allow you to pay an extra 10-25% of your mortgage amount per year. For example, you could use your bonus cheque of $3,000 to pay off part of your mortgage.
3. Shorten the amortization of your mortgage. You could choose to refinance and change your 35 year mortgage to a 20 year mortgage. Take note, though, that your monthly payments will be considerably higher.
4. Increase your monthly payments. If your financial situation has improved and you are making more money, you may be able to make higher payments. Most mortgages allow you to increase your payments in this manner.
5. Refinance to a lower interest rate, but pay the same amount each month. If you maintain a 20 year mortgage, but the interest rate drops from 5.15% to 4.00%, the money you were paying in interest can now go toward the principal.

The secret of paying off your mortgages faster is to save regulary and pay your lender more money and more frequently.