How Do You Pay Off Your Mortgage Faster?

How to Pay Off Your Mortgage Faster: Expert Tips for Homeowners

Buying a home is one of the biggest investments you’ll ever make. While it comes with its share of financial challenges, the long-term benefits often outweigh the short-term strain. With interest rates higher than they’ve been in recent years, the cost of borrowing—whether for a mortgage, car loan, or credit card—can feel overwhelming. But don’t worry, there are ways to ease the burden, especially when it comes to paying off your mortgage faster.

What is a Mortgage?

To buy a home in Canada, you typically need a down payment of at least 5% of the home's purchase price. After that, you'll borrow the rest through a mortgage, which is usually paid off over 25 years, though the term may vary. This loan is repaid in regular payments that cover both the loan principal (the original amount borrowed) and the interest (the cost of borrowing).

The higher the interest rate, the more you end up paying to the lender, which is why securing a lower mortgage rate is crucial.

Why Should You Pay Off Your Mortgage Faster?

The longer your mortgage term, the less you pay monthly, but the more you pay in interest over time. While a longer term gives you more breathing room, it also means you’ll pay more to the lender overall. Paying down your mortgage faster helps you build home equity quicker and reduces the amount of interest you pay in the long run.

8 Ways to Pay Off Your Mortgage Faster

1. Increase Your Payments One of the simplest ways to pay off your mortgage faster is to pay more each month. For example, if you add an extra $500 to your monthly payments on a $250,000 mortgage, you could save over $65,000 and reduce the term to just 15 years. Even small increases, like $50, will save you money in the long run.

2. Pay Off High-Interest Debt First While it might seem counterintuitive, paying off high-interest debts (like credit cards) first can free up more money to put toward your mortgage. Mortgages generally have lower interest rates, so tackling higher-interest debts first will save you more in the long run.

3. Switch to Bi-Weekly Payments Instead of making monthly payments, consider switching to bi-weekly payments. There are 26 bi-weekly periods in a year, which means you’ll make one extra payment each year without even realizing it.

4. Make Lump-Sum Payments Whenever you come into some extra cash—whether it’s a tax refund, bonus, or other windfall—consider using it to make a lump-sum payment towards your mortgage. This will reduce your loan balance faster and help you save on interest.

5. Rent Out Part of Your Home If you have extra space, like a basement or spare bedroom, renting it out can be a great way to earn extra income to put towards your mortgage. With the housing market in demand, finding a tenant can be easier than you think.

6. Refinance Your Mortgage If your financial situation has changed or you want a better rate, refinancing your mortgage could help. You may be able to secure a lower interest rate, shorten your mortgage term, or adjust your monthly payments to fit your new financial goals.

7. Cut Back on Household Spending Small changes in your spending habits can add up over time. For example, cutting down on dining out, coffee shop visits, or subscription services could free up money to put towards your mortgage.

8. Sell Unused Items Look around your home—how many things do you really need? Sell unused furniture, gadgets, or clothes online to raise extra funds. You’d be surprised how much extra cash you can generate by decluttering.

Paying off your mortgage faster is all about making smarter financial decisions. By increasing payments, refinancing, or finding extra sources of income, you can save thousands and pay off your home more quickly. The key is to stay disciplined and make consistent efforts towards reducing your debt.

As a professional realtor, I’m here to help you navigate all aspects of homeownership—from buying a home to managing your mortgage. If you have questions or need advice on how to tackle your mortgage, feel free to reach out!