8 simple ways to pay off your mortgage quicker and save money

8 Simple Ways To Pay Off Your Mortgage Quicker


You and I have something in common. We all have a mortgage and we all want it gone. Being that you are one of my favourite people, I wanted to be sure to pass the goods onto you to show you how you can pay your mortgage off earlier and save more money over time.


Essentially, most mortgages are front loaded with the interest portion of the loan being the majority of each payment. That means for each year that goes by, you put more money into the equity portion (the portion you own) and the interest portion gets lower. At the start of the loan, the interest amount is significant so the faster that mortgage is lowered, the less interest you will ultimately pay.


For example,


A 25 year mortgage on $500,000, at todays fixed rate of 2.35% paid monthly.


Check out the difference of interest payments in year 3 vs year 22.


Year 3

Interest Paid - $10,452


Year 23

Interest Paid - $934


Over the course of the loan of $500,000, you would pay approx $160,796. Yeah….


This just goes to show, if you commit to buying down your property faster and/or implement 1 or more of the techniques, you stand to save thousands of dollars over the course of your loan. Here are a few simple (and a few aggressive) strategies to help you do so.


Use your tax return to put a lump sum towards your mortgage each year. 


  • Don’t spend that extra $400 on a new dress. That isn’t free money, that is YOUR money that you have overpaid to taxes during the year. The best use for that money is simple, put it towards your mortgage. Putting an extra $400 towards your mortgage each year will dramatically influence paying it off quicker.

 Round your payments to the nearest hundred dollars


  • Simply rounding your mortgage payment up to the nearest dollar, or round number can have significant effects on your mortgage. The best part is, you likely won't even notice the amount missing. If you added an extra $50 to your monthly payment, you would save considerable amounts on your interest over time and pay your mortgage down faster.

 Add a suite, if possible


  • This clearly isn't an option for everyone, however, if you have goals that exceed your current situation, fast track it with adding an income suite to your home. You could also consider renting out that extra bedroom to a student, family member or a company like Air BnB. If you could add a rental suite to your home and recieve $750/ month from a tenant put towards your mortgage, imagine how fast you could pay off your mortgage with significant payments like that.

 Lump sum payments (Christmas bonus, annual bonus, inherited money, etc)


  • Similar to using your tax return above, putting that Christmas Bonus of $1000 towards your mortgage each year will have a major impact.

 Refinance your mortgage


  • Likely something that isn’t in the cards, unless you have owned for at least 5 years or so. You can refinance your mortgage to todays lower rates and save significantly. Now it is important to note, there may be additional fees to this including, but not limited to lawyers fees. It is always best to discuss this with one of our trusted mortgage brokers.

 Change to Accelerated Bi-weekly payments


  • So simple yet so effective. Switching from monthly payments to an accelerated bi-weekly payment can have a monster effect. More frequent payment options if done correctly, can take several years off your mortgage amortization and thus you own your home free and clear years ahead of paying on a monthly basis.

 Shorten your loan timeframe


  • Want to pay that 25 year mortgage off way faster and stay committed to the process? Lower your amortization and you will have no choice but to have the property paid off in that time frame. Another option is to make the payments similar to reducing your amortization without actually doing so. This way, you can take advantage of paying your mortgage down faster, with the security of lowering your payments if you ever need to.

 1 extra payment per year


  • Got room for an extra payment somewhere each year? Throw it at your mortgage and watch the effect. The months will melt away as that money goes directly towards your principle. The next time a payment is calculated, the lowered principle amount is what determines the amount of interest that comes off.


We hope that helps you in your attempts to pay down your mortgage faster, and use that money for further real estate investments, or what ever makes you happy.


Let us know if this has helped, we would love to know. 


Wishing you all the best,




Darin Germyn

Macdonald Realty LTD



PS- Always consult with a mortgage professional prior to making any of the changes above and get the numbers directly from them. This way, you can have a clear idea of the enormous effect some of the simple ideas above can have on your financial future. Good luck!

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