You can reduce your mortgage amortization by making additional payments. If you have a $400,000 mortgage loan at a 3.5% variable interest rate, amortized for 30 years, your monthly payment is $1,790.55. If you can make additional monthly payments of $500, you shorten your mortgage by 5.7 years and save $36,639 in interest. 

Another strategy is to make accelerated payments either biweekly or weekly. It is calculated using your monthly mortgage payment and dividing it by two for accelerated biweekly payments or four for accelerated weekly payments. Accelerated payments can save you money on interest charges. By accelerating your payments, you make the equivalent of one extra monthly payment per year.

Using the same example above and assuming you did not make any additional payments. If you’re paying monthly and everything else remains the same, your total mortgage payment over 30 years would be $644,595. 

If it’s accelerated bi-weekly payments, every two weeks, you’re paying $895.27. Over 30 years, your total mortgage payments would be $609,104. That’s $35,491 in savings compared to just making monthly payments! 

If you’re paying accelerated weekly, your weekly mortgage payments are $447.64. Over 30 years, the total mortgage payments would be $608,768. That’s $35,827 saved in interests compared to only making monthly payments. 

Finally, another strategy you can do is to make lump-sum payments. Most lenders would allow you to make lump-sum payments of up to a certain percentage of your original mortgage amount. Suppose your original mortgage amount is $400,000, and the lender lets you make a lump sum payment of up to 15% without paying a prepayment charge. In that case, you can then make a lump sum payment of up to $60,000 yearly.

It is important to note that each lender’s policy is different. Some allow you to make lump-sum payments before the end of your term, at the end of your term, at certain times during your term, and on specific dates set out in your mortgage contract. 

By working with an independent mortgage professional, you can rest assured that you receive independent advice and a game plan tailored to your needs. Please connect anytime; it would be a pleasure to work with you!