Own Your Home Faster and For Less
Wouldn’t you rather own your home in 15 or 20 years instead of the typical 30? There are many benefits to refinancing your home but paying your mortgage in less time is probably one of the savviest financial decisions you can make. Reducing the length of the loan by refinancing can not only shave years of payments off your mortgage, allowing you to become financially independent, but you can save you tens of thousands of dollars in the process!
Paying off your home earlier might allow you to retire earlier, travel more, and even have extra cash to invest because it will reduce the overall amount of interest you’ll pay over the life of your loan. You’ll increase your home’s equity even faster. You’ll not only own your home in less time, but you’ll pay much less to own it. Talk to one of our highly-trained Personal Mortgage Advisors today to see how you could benefit from refinancing your home to shorten your term.
Term Reduction Refinance FAQs
There are four simple ways that you can pay your mortgage off faster.
- Make biweekly payments – Rather than making one monthly payment, you can make half the payment every two weeks. If your mortgage payment is $2,000 a month, you would pay $1,000 every other week. Because there are 52 weeks in a year, a biweekly payment schedule will result in the equivalent of 13 full monthly payments per year. The extra payment that you’d be making each year can help you pay your mortgage off 5 years sooner and eliminate 5 years of interest as well.
- Make extra principal payments – Most mortgage lenders allow you to make an extra payment every month and mark it “principal only”. This payment will go directly to pay down the principal (the house itself), rather than both the principal and interest.
- Refinance into a shorter-term loan – If you currently have a 30-year mortgage, refinancing it as a 15-year loan will help you pay it off in half the time, potentially at a lower interest rate as well.
- Put unexpected money you receive into your mortgage payments – If you put the proceeds of tax refunds and annual bonuses towards the principal of the loan, you’d be pleasantly surprised at how quickly you can pay off your mortgage.
There are two key benefits to a 15-year mortgage versus a 30-year mortgage. A 15-year mortgage carries a lower interest rate, which means that the overall interest you’ll pay on the principal balance of the mortgage is lower. The second benefit is that you’ll pay off your mortgage in half the time. By paying interest for only half the amount of time, you’ll end up paying significantly less interest overall.
- Pay While You’ve Got the Money – Your monthly mortgage payment probably represents a significant percentage of your income. But at retirement, most people’s income drops by up to 66%. Eliminating your mortgage payments before retirement can translate into less financial stress later on.
- Interest Savings – The shorter your term, with most programs, the less interest you’ll pay overall.
- Peace of mind – Some people just want to be debt-free as early as possible.Speak to a Mortgage Advisor to discuss your personal goals and needs.
With this handy calculator, you can gauge your potential new monthly mortgage payment in seconds, and ensure you’ll have enough money left to cover the rest of your living expenses. Choose your rate and term—you might be surprised to see how affordable it is to own your home sooner than you thought possible. Note how much interest you’ll pay over the life of the loan, and then enter prepayment amounts to calculate their impact on your overall expenditure.
How much can I save by reducing my loan term?
Calculate your potential new monthly mortgage payment in seconds with this handy calculator, so you can make sure you have enough money left over each month for all your other expenses. Choose your rate and term—you might be surprised to see how affordable it is to own your home in less time than you thought. See how much interest you’ll pay over the life of the loan, and enter prepayment amounts to calculate their impact on your mortgage.