A recent survey showed that the trend of paying off mortgage early has reduced in Canada. According to this survey 55% people aim to pay off their mortgage early. This figure has reduced from the percentage of year 2013 when 68% people accelerated their payment frequency to pay off their mortgage early.

This decrease is surprising in a way because Canada is now offering low interest rate therefore making it the best time to rewrite your mortgage and take advantage of best possible terms. Even small changes can save you thousands of dollars in the long run.

There are many benefits of paying off mortgage early which you should consider to accelerate the frequency of your monthly payments. Besides the obvious fact that the more you pay the less you owe, there are some benefits as well. Let us take a look.

A Less Expensive Home

Paying huge monthly payments may seem like an expensive option, but it can definitely reduce the total amount of money that you owe, and your interest rate is calculated on basis of the amount that you owe. Lenders look more interest rate at the beginning of mortgage term so that they can get back their money as soon as possible and by the time the amount of your interest rate decreases but the your principal (the amount that you owe) goes up with each monthly payment.

So when you pay extra amount it means that the amount of your interest rate decreases which in turn decreases the amount of your principal and therefore the loan amount you owe drops quickly.

Mortgage-Free

As explained earlier paying off your mortgage early comes up with many benefits. When you pay off your mortgage completely it’ll open up new opportunities. Lenders love to see equity sitting on a property and they are eager to lend against it.

If you retire early you need some savings in your hand to start a new business and being mortgage free becomes a blessing in that case. Paying your debt early also gives you a sense of freedom and security.

Future Benefits

If you have a family or you are going to start a family, you need some cash in your hand. Many expenses are involved in running a family, and if you get short of money in that case then the burden of paying mortgage becomes nothing then a stress.

Even if you have money arranged for your family’s expenditures, extra money is always welcomed in the family. You can utilize it in any way you want.

Investment

How would you utilize that money that you pay every month in the form of mortgage installment? Surely you can save a handsome amount of money by paying off your mortgage early. Once again you can accelerate your savings and can utilize them in any future prospect.

 

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