4 Ways to Pay Less Interest on Your Mortgage

As the interest rates in Canada continue to rise, you may be wondering how to keep more money in your pocket when it comes to your mortgage. We understand that finding the best mortgage terms possible is crucial, and that's why we're here to help. Here are four valuable tips that can make a real difference in your financial journey:

Shop Around for the Perfect Mortgage Fit

When it comes to finding the right mortgage with favorable interest rates, it pays to explore your options. Don't just settle for the lowest interest rate; consider other factors as well. Look for prepayment privileges that allow you to pay down your mortgage ahead of schedule. Additionally, inquire about penalties and portability. Life can throw unexpected events your way, such as a divorce or job loss, so it's essential to understand how these circumstances might impact your mortgage terms. Being able to transfer your mortgage to a new property is also a significant advantage.

Maximize Your Lump Sum Payments

If you have the financial means, making extra payments towards your mortgage can be a game-changer. By consistently reducing your principal amount, you'll ultimately pay less in interest over time. Whether it's a work bonus, a generous monetary gift, or a tax refund, consider using these windfalls to pay down your mortgage. By doing so, you could potentially save thousands of dollars in interest.

Opt for Accelerated Payments

Monthly mortgage payments are the standard, but have you ever considered switching to a bi-weekly accelerated payment schedule? By making 26 bi-weekly payments instead of 12 monthly ones each year, you'll shorten the overall amortization time of your mortgage. In fact, it's like making an additional 13th monthly payment annually. This seemingly small adjustment can add up significantly and potentially reduce your mortgage payments by three years.

Make the Most of Mortgage Renewal

When it's time to renew your mortgage, seize the opportunity to reassess your terms. Aim to keep your payments the same, or better yet, secure a lower interest rate to reduce your monthly financial commitment. By staying proactive during the renewal process, you can optimize your mortgage and save money over the long run.

At the Compass Team, we understand that finding extra money in today's economic climate can be challenging. That's why we emphasize the importance of buying within your means and leaving room for additional lump sum payments. We know firsthand that a financially comfortable mortgage is key to reducing stress and enjoying your home to the fullest. Aim for a purchase price below your maximum limit to avoid being house poor.

Furthermore, if opportunities arise to earn extra income through overtime or additional work, we encourage you to seize them. Every bit of disposable income you generate can be directed towards paying off your mortgage faster, resulting in substantial savings in the long term.

When it comes to your real estate needs, trust the Compass Team to guide you every step of the way. Our expertise, dedication, and commitment to your financial well-being set us apart. Contact us today to explore how we can help you make the most of your real estate journey.