The Mortgage Man

Get more out of your mortgage experience!

Reduce your Mortgage Burden

A mortgage is necessary for almost every person buying a home or other piece of property. If you thought that finding a good mortgage lender and finalizing interest rates and other details to your satisfaction was an ordeal, wait until you experience what comes later – the toughest part of the whole mortgage, the repayment.

Making payments each month, on time every time, sometimes the stress of debt gets to you. Wouldn’t life be so much easier if we were free of debts? Well, there are ways to meet this monster head on and see it off as soon as possible. Read on to see how you can pay off your debt sooner and clear your debt long before you are required to.

Take advantage of the Principal Prepayment Technique (PPT): You don’t have to wait for the entire mortgage period to come to an end for you to be debt free. If your loan does not come with a prepayment penalty, paying an extra amount every month towards your principal will ensure that you repay your debt much earlier than you’re supposed to. Since you pay a higher interest amount the longer you take to pay off your loan, the money you save in terms of interest when you repay early is an added cherry that adds appeal to the cake of being debt free. Follow this link for more on the principal prepayment technique.  On a 30 year loan, adding one extra payment per year reduces the term on your loan by about 6.5 years.  This means that if you had a $1000 mortgage payment and you added an extra $83 to the principal every month, you will reduce the term of your loan by almost 25%.

Refinance your mortgage at lower rates: If your home has risen in value over the years, use the equity on it to refinance your mortgage at a lower interest rate. A new mortgage with different rates is a godsend for those who are struggling to make each monthly payment

Work on your credit ratings: Your mortgage amount and your interest rates are based on your credit ratings; improving them improves your chances of asking for a reduction in your interest rates when you refinance, leading to an overall reduction in the total amount you have to pay.

Put your cash back credit card to good use: Cash back credit cards are much better than those that earn you points. First, the benefits are easier to calculate in terms of value, and secondly, well, you can use the cash for anything rather than the select gifts that points award you. Use the cash you get back from using your credit cards towards your mortgage payments. But make sure that you don’t go overboard by spending rashly using your credit card and exceeding your credit limit or spending on unnecessary things. Remember, the purpose of the whole exercise is to reduce your debt burden, and you certainly don’t want to be jumping from the frying pan into the fire, or from the horrors of one debt to another.

This article is contributed by Sarah Scrafford, who regularly writes on the topic of luxury real estate in Canada. She invites your questions, comments and freelancing job inquiries at her email address: sarah.scrafford25@gmail.com

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