4 ways to pay your mortgage faster

Is it possible to pay your mortgage off faster — and should you? Here are four ways to make it happen, and what to consider along the way.

A faster mortgage repayment awaits

Buying a home is likely one of the most expensive purchases you’ll ever make, but well worth it if you find your forever home. Yet once you make your move, the reality can sink in as you make your first mortgage payment. 

Is it possible to pay your mortgage off faster?  

Absolutely, and if you’re planning to be in your house long-term (not reselling or refinancing in the short-term), it’s worth knowing your options before you finalize your mortgage paperwork. Other than winning the lottery or waiting for an inheritance, there are ways to do it that can still allow you to be financially secure—without exhausting all your resources towards the mortgage.  

Keep in mind that everyone’s financial plan is unique, so check with your financial advisor to determine if paying off your mortgage faster makes sense for your situation. 

Here are four strategies to consider: 

1. Pay your mortgage more often 

Often, people opt for monthly mortgage payments because it feels simpler and makes it easy to remember. But increasing the frequency of a payment to a bi-weekly or weekly timeframe will lower both your interest and outstanding balance sooner.  

How? Increasing the frequency of the payment reduces the time for interest to accrue. If you’re buying a million-dollar home in a competitive market, you already have a lot of expenses ahead of you. So any additional interest payments can really start to add up.  

By switching to more frequent payments, you could easily save a little extra along the way. Every bit helps! And with bi-weekly payments vs. monthly payments, for example, you’d be paying 26 times per year rather than 12. This amounts to one extra month's payment for the year. 

2. Increase the amount of each mortgage payment 

Much like the frequency strategy, you might choose to increase payments, which can help you become mortgage-free sooner. (Check with your mortgage specialist for full details on this option.) 

Let’s say your mortgage is for $1,000,000 and you’re making a regular bi-weekly payment of $1,900. An increase of just $200 per payment could cut your interest payments by around $1,100 for a 5-year term. In addition, over a 25-year mortgage plan, you could actually save three years and upwards of $29,000 by increasing your payment amount. 

Note: All amounts are simplified for demonstration purposes. See Wyth’s current mortgage rates. 

3. Make extra lump-sum mortgage payments 

You may also be able to make an extra yearly lump-sum payment. If you’ve received a work bonus, tax refund or inherited money, for example, you can put this extra cash towards your mortgage.  

With the same $1,000,000 mortgage above, if you were to add a $5,000 lump-sum payment, you could save around $500 on interest for the term while reducing your balance further. If you were to make similar lump-sum payments every year, you could cut considerable time off your mortgage, and save many thousands of dollars from your overall payments.  

Note: Once again, it’s always best to check with your mortgage specialist regarding your standard mortgage terms and conditions regarding your prepayment privileges. 

4. Shorten your amortization period 

Let’s say you or your spouse recently got a promotion and received an increase in pay. Now that you have higher income, you can consistently contribute more to your mortgage payments. When this occurs, it may be worth considering a reduced or shortened amortization period. 

For example, if you move from a 25-year to 20-year amortization period, your regular payments will need to increase. If you were paying $1,900 bi-weekly before, you might now be paying $2,280. But assuming your new income will easily cover that increase, you’ll be mortgage-free five years sooner and you could save close to $60,000 over the lifetime of your mortgage. 

Note: All amounts are simplified for demonstration purposes. See Wyth’s current mortgage rates. 

Which option is right for me? 

Looking for ways to save on your mortgage is specific to your needs. While some strategies can work today, others may not fit your current budget or life goals.  

Knowing all your options is important, since you may be able to do one or more of these in the short or long term. And as your career, income, family goals and financial health evolve, the other mortgage options may become more realistic. You may also ask your mortgage specialist for additional ways to pay off your mortgage faster. 

No matter what, owning your home sooner means freeing up money to do more, such as paying for your kids’ education, investing elsewhere, making renovations, travelling and so much more. It’s a win-win if you can make it happen. 

How Wyth Can Help 

  • Learn more about Wyth mortgages. We specialize in alternative and complex lending solutions for every stage of your home buying experience.