Any of desi members aware of Paying down house mortgage faster?
I am aware of Bi-weekly, Anniversary / Balloon payments, and higher lump sum payments.
Advise other options if any?
Thanks
Hi ..Its more of a personal decision .. As of me I will never pay my mortgage earlier ..Where else you can get this amount for so little interest ??
byweekly payments reduces mortage terms to 21 instead of 25 ..
It all depends upon your expenses, age, financial market condition, renewing mortgage with higher/lower rate, money for rainy days, kid’s expense and lot of other factor. But these days’ banks are giving only 2-4% interest with any kind of fixed deposit.
Personally I favor to live debt/mortgage free as much as possible if you bought for living.
Location: Western Hemisphere
Posted on: 06-05-08 12:55:05
Quote:
Originally posted by Kanya
Any of desi members aware of Paying down house mortgage faster?
I am aware of Bi-weekly, Anniversary / Balloon payments, and higher lump sum payments.
Advise other options if any?
Thanks
You can also increase the amount of each payment up to the limit allowed by your institution. This increased amount goes towards principal. I have increased mine and the amortization period has come down from 20 years to 13. Again, it all depends on your affordability and priorities.
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Dimple2001
Quote:
Originally posted by Kanya
Any of desi members aware of Paying down house mortgage faster?
I am aware of Bi-weekly, Anniversary / Balloon payments, and higher lump sum payments.
Advise other options if any?
Thanks
A good way could be to go for an open variable mortgage whereby you can reduce the mortage as and when you like without any restrictions on amounts. I have just entered a 5 year open variable mortgage and if I repay the whole amount within a year, the only penalty I have is a $200 charge. If I pay after the first year, no penal charge. While they have fixed my bi-weekly payments, I can pay any amount more than scheduled payment.
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Chandresh
Advice is free – lessons I charge for!!
In addition to bi-weekly payments and lump sum payments one can also do the following:
Increase your regular payment:
The secret to borrowing is borrow early in your life. The reason is that the future value of the dollar decreases. When you borrow early, your payments are set. As time goes, your incomes increase, but your mortgage payments stay the same, provided you locked-in to a long term, fixed mortgage. Therefore, in the future you may be in a position to increase our payment on your mortgage, regardless if you are paying weekly, bi-weekly, or monthly. Any increase in payment is directly going to pay down the mortgage, thus saving you thousands down the road due to the effect of interest not compounding on that amount for the life of the mortgage.
This feature varies from bank to bank, e.g. Scotia allows you to increase your mortage amount upto 15%.
Double-up on your payments
A few lenders will allow you to double-up on your payments, and the extra payment goes directly towards the principal. This is a neat feature for someone who prefers monthly payments but wants the results of weekly and bi-weekly payments.
Early renewal mortgage option
This is a great feature to have when interest rates are on a rise. If you are locked-in to a term and the mortgage will be maturing in months or years down the road, and the mortgage rates are on a rise, you can renew your mortgage before the maturity and lock-in the low rates for a new term.
Port your lower rate mortgage and avoid mortgage penalty
If you want to take your mortgage with you when you move, you can, if your mortgage has a clause that allows you to do that. This option allows you to continue your savings on your lower rate if the going rates are higher, as well as avoid any penalties if you were to break that mortgage. If you need a larger mortgage for the new property, your existing mortgage amount might also be increased. As for the associated costs, since a new mortgage document must be registered on title, legal fees and normal appraisal fees would be applicable.
Let sellers assume your mortgage
If you are moving and don't want to take your mortgage with you, or you are selling and not buying, an assumable feature can allow the buyers of your property to take over the mortgage, provided they meet the lender's qualifying criteria. By doing so, you will not pay any penalties as you are not breaking the mortgage contract. In fact, if your interest rate is lower than those available at the time, your assumable mortgage suddenly became a great selling feature for your property.
A word of caution here: Just because someone assumes your mortgage does not necessarily mean you are off the hook for the responsibility. You must get a release from the lender to ensure that you are no longer liable for it. Some mortgage lenders automatically offer a release, but with others, you must make the request, and do it through your lawyer.
More on my website: http://www.realestate-ontario.com/mortgage.htm
Regards,
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Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/
