A mortgage can seem like a life sentence, but it doesn’t have to be. There are several painless ways to pay off your mortgage quickly. If you are dreaming of being debt-free in less than 25 years, then consider these tips when applying for a mortgage and look for a mortgage that allows you the flexibility to put these payment options into practice.

1. Pre-payments
All lenders offer some kind of prepayment – or extra payments against the principal, but the amount and how it applies to the mortgage varies. Find out what your lender allows, and try to maximize on that allowance.

2. Switch to bi-weekly, or weekly payments
Opting to increase the frequency of your repayments from monthly to bi-weekly or even weekly payments will automatically save you thousands of dollars in interest. For example, the monthly repayments for a $100,000 mortgage at 8% interest amortized over 25 years would be $736.21. Bi-weekly repayments on the same mortgage would be $381.61 – or half the monthly payments. However, over the life of the loan the savings would be $30,464 in interest because in the course of the year, you will make one extra payment.

3. Round up
You might not notice the extra $10 you’ve added to each mortgage repayment, but you’ll definitely notice the difference it makes over the long run. Adding even a small amount to each repayment is an effective way to reduce your mortgage interest.

4. Make it a double-double
Many lenders allow you to make additional payments, or “double-up payments,” on your mortgage. These amounts are applied to the principal only and will reduce your mortgage balance. Some lenders will allow you to skip a payment if you’ve made a double-up payment previously. Obviously, it’s better not to take this option if you are trying to shorten the life of your loan, but it could come in handy in a crisis, or possibly save you from using your credit card to cover an emergency.

5. Steady flow
Even if rates drop, you should try to keep your mortgage repayments at the same level.

6. Annual boost
Try increasing the amount of your payments to the maximum you can afford each year. If it turns out to be too difficult to make the repayments or your life circumstances change, most lenders will allow you to reduce the amount again.

7. Lump-sum payments
Put work bonuses, monetary gifts or inheritance money towards your mortgage to reduce the principal and cut down interest. You can also use your RRSP and tax refunds to your advantage. Many of us purchase RRSPs each year to offset our taxes and receive the maximum possible rebate. You can then use your tax refund and the tax-free interest earned on the RRSP to pay down you mortgage.

8. Refinance
Refinancing your mortgage to a cheaper rate could make a huge difference to the life of your loan. The trick with refinancing is to determine if the cost of the mortgage penalty for breaking the contract outweighs the savings benefit.

9. Earn more, spend less (or the same)
If your salary increases, consider increasing your mortgage payments as well. While having increased disposable income is always attractive, you will benefit more reducing your debt.

10. Early renewal option
This is a handy option when interest rates start to rise and you are locked into a mortgage that will not mature for a few more years. A mortgage with an option for early renewal allows you to renew your mortgage before the maturity and lock-in low rates for a new term.

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