Did you recently buy a condo in Toronto or a Toronto loft and you’re looking to pay off your mortgage sooner? Toronto condos are a good entry point for first time homebuyers due to their relative affordability compared to houses. There are many condos for sale in Toronto to choose from. Owning a condo is nice, but owning a mortgage-free condo is even better. Here are 10 simple ways to pay off the mortgage on Toronto condos sooner.
1. Shop Around with a Mortgage Broker
A mortgage is most likely the single biggest debt of your lifetime, so don’t you think it makes sense to shop around? Working with a mortgage broker is easiest way to do that and best of all it won’t cost you a thing in most cases. (That’s because lenders typically compensate mortgage brokers directly.) Most brokers have access to dozens of lenders, lenders you wouldn’t normally have access to on your own. Wouldn’t you rather have the mortgage broker do all the hard work for you? I know I would. Working with a broker is a no-brainer.
2. Accelerating Your Mortgage Payments
By accelerating your mortgage payments, you can reach mortgage freedom that much sooner. When you accelerate your payments, although you’re still paying the same number of mortgage payments, you’re paying the equivalent of 13 months of mortgage payments instead of only 12 months. How does that work? Your mortgage payments are slightly higher versus doing non-accelerated payments, saving you a boatload of interest long-term.
3. Make Lump Sum Payments
When you make lump sum payments on your mortgage, unlike a regular mortgage payment that’s split between interest and principal, lump sum payments go directly toward principal. Where do you come up with extra money to make lump sum payments? Use found money – bonuses, inheritance and tax refunds – to toss at your mortgage.
4. Shorten the Amortization Period
Just because you can pay off your mortgage over 25 years, doesn’t mean you have to. By shortening your amortization to 15 or 20 years, you can pay off your mortgage that much sooner. (Just a word of caution, it might make sense to go with a longer amortization, as you’ll be tied to making higher mortgage payments, even if you run into financial difficulties like job loss.)
5. Round Up Your Mortgage Payments
If your regular mortgage payment is $813, why not round it up to $825? You can do this by increasing your mortgage payment through prepayments. You probably won’t feel the $13 extra much (it’s about the price of a ticket at the movies), but the extra money will add up over time in saving you a ton of interest over the life of your mortgage.
6. Pay Your Mortgage as If Rates Are Higher
Concerned about the prospect of higher mortgage rates when your mortgage comes up for renewal? By paying your mortgage as if rates are already higher, not only will you be used to higher payments, you’ll save yourself a ton of interest. Paying your mortgage as if mortgage rates are 2% higher is a good way to stress test your own finances.
7. Consider Refinancing Your Mortgage
If you’re tied into a mortgage with a higher rate, consider refinancing it. Sit down with your mortgage broker who can crunch the numbers and see whether breaking your existing mortgage to sign up with a new mortgage at a lower mortgage rate makes sense.
8. Avoiding Mortgage Penalties
When signing up for a mortgage, most of us care solely about finding the lowest mortgage rate, but by not considering the mortgage penalty, it can come back to burn you later on. Different lenders offer different penalties – some higher, some lower. Find out what the penalty for breaking your mortgage is so you’re not blindsided by it later on.
9. Getting Your Side Hustle On
Looking to earn extra money to toss at your mortgage? Then get your side hustle on! Look for something you love and try to make money off of it. Are you good at writing? Then become a freelance writer. Do you enjoy photography? Then become a wedding photographer. The sharing economy has made it easier than ever to make money in your spare time.
10. Set a Mortgage-Free Date and Celebrate Your Accomplishment
By setting a date that you’d like to be mortgage free and planning a celebration, it will motivate you to work that much harder toward paying off your mortgage.
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.