The process of purchasing a home inevitably involves being able to pay off your mortgage. There may be mortgage deferral arrangements involved, as well as deferral cancellations. The process may also encompass deciding on the right payment frequency and asking about the different types of interest fees.
Of course, you may wish to pay off your mortgage faster as well. To do this, you should first look into the details of your mortgage contract and see if it allows you to put extra income toward your mortgage. Your contract may let you, for example, make lump-sum payments and increase the amount of regular payments. Have a conversation with your mortgage lender and make sure you understand what this prepayment privilege may entail, as well as what other options may be available to you.
How do I make lump-sum payments?
In terms of lump-sum payment, these can be made in addition to your regular payments. Make sure to speak with your mortgage lender and review your contract to determine the specific or limited amount that can go toward your mortgage.
Lump-sum payments can be made, for example, at the end of your term, on certain dates determined by your contract, at certains times during your term, and even before the end of your term.
What about increasing the amount of my regular payments?
As mentioned, you can also increase the amount of your regular payments in order to pay off your mortgage faster. It should be noted that you may be only allowed to increase these payments by a specific amount as well. Make sure to refer to your contract for the details on this amount. This is because if you increase your payments by more than it’s allowed through your prepayment privilege, then there may be a penalty.
Additionally, once you increase your payment amount, you cannot decrease it until the end of your term. This term, which can last for a few months, five years, or even longer than that, refers to the period that you are bound to your mortgage contract.
Is there an accelerated option available?
If you’re interested in paying off your mortgage at a faster rate, then you may consider an accelerated payment option. This may allow you to make weekly payments or bi-weekly payments. Compared to monthly payments, This option lets you put more funds toward your mortgage. Furthermore, another advantage of an accelerated payment option is that it can help you save on interest charges. This is because the acceleration of your payments is the same as an extra monthly payment each year.