How to pay off your mortgage more quickly
June 28, 2020

How to pay off your mortgage more quickly

A mortgage is a long-term commitment that helps you secure your family’s future, add to your net worth and build equity in your home.

Even though payments are part of the cost of homeownership, there are several ways you can lower your interest costs and pay off your mortgage faster, so you can own your home sooner.

Here’s how we can help you save money and become mortgage-free more quickly. Let’s use an example of a $100,000 with an amortization period of 25 years, an annual interest rate of 5%, over a five-year term with payments made monthly.


TIP #1. Switch to bi-weekly or weekly payments

Save $451.53 in interest and lower your outstanding balance by $3,359.56.

When you pay your mortgage more frequently, there is less time for interest to accrue because you make 52 weekly payments instead of 12 monthly payments. You end up paying a little more annually but this strategy reduces the amount of interest you pay and reduces the principal amount you owe much more quickly than with monthly payments.

Your paymentsInterest paid in 5 yearsYour interest savingsBalance owing

Paid monthly

$581.60

$23,403.80

$0

$88,507.50

Paid bi-weekly

$290.80

$22,972.62

$431.18

$85,168.30

Paid weekly

$145.40

$22,952.27

$451.53

$85,147.94


TIP #2 Increase your payments

Pay off your mortgage 4 years sooner.

You could become mortgage-free sooner simply by increasing your payment by as little as 10%. Imagine being mortgage-free four years faster. Concentra mortgage customers can increase payments by up to 25%.

Your payments

Interest paid in 5 years

Balance owing

Paid monthly

$581.60

$23,403.80

$88,507.50

Increase payments by 10%

$639.16

$22,943.34

$84,557.44

Number of years to pay off your mortgage

25

21

That’s 4 years sooner!


TIP #3 Make lump-sum payments

Save $1,589.19 in interest and lower your outstanding balance by $3,950.06 in just five years.

A lump-sum payment at the beginning of any year can save a lot in interest over time. Consider using your bonus or part of your RSP tax refund to make an annual lump-sum payment. Plan ahead and make annual one-time payments part of your household savings strategy. Concentra mortgage customers can make lump-sum payments of up to 20%.

Your paymentsInterest paid in 5 yearsBalance owing

Paid monthly

$581.60

$23,403.80

$88,507.50

Make a lump-sum payment

$2,000

$21,814.61

$84,557.44

Interest savings

$1,589.19

Outstanding principal after 5 years

$88,507.50

$76,918.31


Tip #4 Shorten your amortization

Save $32,619.21 and take 10 years off the life of your mortgage.

If you salary has increased since you first bought your home, you may be able to take advantage of today’s lower interest rates to shorten your amortization. Your monthly payments will increase to match what you can afford with a higher income. But the shortened amortization period will lower the overall cost of paying off your mortgage.

Your payments25-year amortization20-year amortization15-year amortization

Paid monthly

$581.60

$788.12

$1,058.15

Total interest

$74,481.50

$57,710.01

$41,862.29

Lifetime savings

$16,771.49

$32,619.21

A Concentra Mobile Mortgage Specialist can help you determine the best combination of strategies to save money and pay off your mortgage sooner. Let’s chat about your options today.

The content of this article is provided for general information purposes only. It is not intended to be specific advice regarding legal, accounting, financial, or tax matters on which you should rely. You must obtain more specific or professional advice before taking, or refraining from, any action or inaction on the basis of the content in this article. We accept no liability for any loss or damages arising out of your use or reliance of the information in this article, including liability towards third parties.

© Concentra Bank, 2020
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