Sean Cooper did it and his story has gone viral. At the age of 30, he paid off his $255,000 mortgage in 3 years and 2 months. How did he do it?
He worked three jobs, there was literally no travelling, he brown bagged it for lunch and actually lived in his basement apartment while renting out the balance of the house. OK so this is not for everyone. But the good news is there ARE THINGS YOU CAN DO to kill that mortgage without going to quite the extremes of Cooper. Here are some ideas:
1) Accelerate to bi-weekly payments – every 2 weeks for 26 payments per year. A $300,000 mortgage at 3% over 25 years will cost $125,920.44 in interest. Increase your payments to bi-weekly, and you will shave nearly 3 years off your amortization schedule and save just over $16,000.00 in interest.
2) Make a lump sum payment once a year. An annual lump sum payment of $250.00 on a $400,000 at 3.5% over 25 years combined with bi-weekly payments results in decreasing 3.5 years off your amortization.
3) Put “found” money, and that includes gifted money on the mortgage. Little amounts chip away and could save you years. Use RSP refunds to pay down principle.
4) Consider rounding up your mortgage payments – if you pay $457.00 a month, round it to $500.00 and combine it with bi-weekly payments. You won’t really notice the difference and the savings are huge.
5) Shorten your amortization period. By shortening your amortization from the standard 25 years to say 20 years, your mortgage payments will be slightly higher, but you’ll save a boatload of interest.
6) Pay your mortgage as if mortgage rates are higher. By upping your mortgage payments as if rates are 3 percent higher, you’ll be prepared if interest rates increase when your mortgage comes up for renewal.
7) Do shop with a mortgage broker. Your local bank branch may not give you the lowest mortgage rate. By shopping with a mortgage broker, you’re more likely to get the lowest rate. A mortgage broker is compensated directly by the lender, so you won’t pay anything out of pocket.
8) Do consider other factors besides just the interest rate. The lowest interest rate isn’t always the best mortgage. A slightly higher interest rate may offer you perks, like more generous prepayment privileges.
9) VISUALIZE: See yourself MORTGAGE FREE and embrace what you need to do to make it a reality!!!
SOURCES: milliondollarjourney,com, CTV
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