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Simple Ways to Pay off your Mortgage Faster

Paying off debt frees up your income for more productive uses. Although it's important to pay off high-interest credit card debt as quickly as possible, it's also advantageous to take care of your mortgage in a timely manner. Whether it's through refinancing to a lower interest rate or putting a little bit extra towards your debt each month, there are numerous ways to pay down your mortgage faster.

Pay a Lump Sum

One way to chip away at your debt is to pay a high lump sum whenever you come into any extra money. This could come in the form of an inheritance, a tax refund, or a small windfall from selling stocks. Rather than putting this money into savings or paying for a holiday, you could put a portion of it towards your mortgage. A single $5,000 payment could reduce your repayment term by a whole year, depending on your loan terms.

Take Advantage of Low Interest Rates

Interest rates have been historically low in recent years, so if your mortgage is older, you might wish to refinance to lock in a lower rate. If you plan to stay in your home for several more years, it's worth asking your lender about their lowest refinancing rates. You can then compare this information to offers from outside lenders to find the best option. Generally, if you can reduce your interest rate by at least 1%, it will be worth your while to refinance. You'll need copies of your asset information, prior tax returns, proof of investments, and a proof of income to get started.

Refinance to a Shorter Repayment Term

Another reason to think about refinancing your mortgage is to reduce your repayment period. If you currently have a 10 year fixed-rate mortgage, you might want to consider switching to a 7 year plan instead, if you can afford it. With lower rates, you may be able to pay off your loan much faster without increasing your monthly payments too much compared with your current plan. Paying off your loan a few years earlier can save you heaps of interest.

Rent out a Room

Rounding your payments up to the nearest whole number is a simple way to pay off your mortgage faster without feeling the squeeze. If your current payment amount is $923.46, for example, you could pay an even $1000 per month. Those who have a spare room in the house might want to think about temporarily renting it out to facilitate these higher mortgage payments. There are many short term renters in need of houses for rent who could help you round up payments and rid yourself of your mortgage faster. Taking a side job is another option.

Sign up for Biweekly Payments

If you're not willing to commit to the process of refinancing or renting out a room, another way to pay down this debt faster is by arranging to pay half of your monthly payment every two weeks, rather than a single payment once a month. Biweekly payments can remove nearly six years from a 30-year mortgage, saving you thousands in interest.

These are just a few ways to take charge and pay off your mortgage in a timelier manner. The sooner you can rid yourself of this debt, the more money you'll have to save for retirement or invest in other endeavours. Some lenders will charge fees for early repayment, so it's important to read all terms and conditions carefully before you take action.