Many analysts are predicting the Bank of Canada will cut rates to boost borrowing and spending at its next policy announcement on October 30th. This idea of falling interest rates is turning many British Columbians’ minds to their mortgages and is creating a big opportunity for people to pay off their mortgage much faster than their amortization period.
However, thousands of borrowers in BC have no idea what interest rate they are paying, when their mortgage rate last changed, or the best ways to get rid of their largest debt.
Here are 5 simple steps to paying down your mortgage faster:
Step 1: Pay extra
Any money paid off the principal today will forever be reducing the principal interest of the mortgage — meaning more principal is paid off in every future repayment. Whether it’s an additional $50 or $100 bi-weekly, it adds up to take years and thousands of dollars off your mortgage.
Step 2: Know your mortgage rate
The only way to work out that you’re paying too much for your mortgage is to understand what your interest rate is and what the competition offers. Lenders often change their tactics, sometimes aggressively chasing new business with reduced fees and lower interest rates. Sometimes it pays to break your current high-interest mortgage —including paying the penalty to break your mortgage — to find an alternative lower rate.
For example, if you’re currently locked into a 3.9% fixed rate but you know variable rates are sitting around to 2.8%; it may be a good idea to find out what the best alternative is and consider switching. We can help you do this!
Step 3: Avoid unnecessary spending
Be aware of what you might be wasting money on that you could be putting towards mortgage repayments. Sometimes it’s a good idea to browse through your debit and credit card statements once a month to see where your money is being squandered. For most of us, it’s takeaway coffees and lunches. If you are not already doing so, see how much you can save each month by making your own coffee in the morning and bringing your lunch to work and ask yourself if this money can be put towards my mortgage instead?
Step 4: Avoid monthly repayments
Borrowers are often urged to make their payments bi-weekly rather than monthly if they want to save money. We recently covered this topic in great detail in this blog so we encourage you to head on over and check it out to see how much money you can save!
Step 5: Mortgage checkup
Just like you get an annual health checkup at the doctor’s, having financial health checks at least once every year is important too. As mentioned previously, refinancing with another lender to a cheaper rate might save money.
We offer our up-front fully discounted rates without you having to beg or having you bring your entire portfolio over to qualify for a lower rate. We also take care of all the documentation for you and help with transferring your mortgage. That’s our promise.
Not convinced yet? Contact us and let us show you how much money you will save!
