Mortgage Blog
Canada's Mortgage Experts
Want to pay down your mortgage faster?
June 20, 2017 | Posted by: Dana Stauber
3 Steps to Pay Off a 25 Year Mortgage in 16 Years
Here's a strategy that could help you save thousands of dollars in unnecessary interest, and help you pay off your mortgage faster.
These are simple steps that take advantage of the magic of compounding.
Step 1 - Switch to an accelerated bi-weekly payment.
Switching to an accelerated bi-weekly payment schedule adds one extra monthly payment every year. It will also take an average of 3 years off a 25 year mortgage.
Step 2 - Increase your payment by 5%.
For instance, if you have a $1,000 bi-weekly payment, you will increase your payment to $1,050.
Step 3 - Repeat step 2 year after year.
The most important task is to set a reminder to increase your payment by 5% yearly. This one step will help you pay off a 25 year mortgage in just under 16 years.
Here's The Math
If you have a $300,000 25 year mortgage with a rate of 3%, you would save $47,003 and pay off your mortgage in 16 years.
If a 5% increase annually is too high right now, no worries. A 2% increase would save you $32,334 in interest and take 7 years off your mortgage.
If you are interested in comparing your mortgage to current rates, or want help increasing your payment email me at danastauber@invis.ca and I’d be happy to help!
