Getting your mortgage to work for you can be easy.   The biggest concern of most Canadian homeowners is to pay off their mortgage as fast as they possibly can. Generally, homeowners are aware that providing extra down payment, and extra payments during the early years of the mortgage will dramatically lower the life and interest costs associated with the mortgage.   The tips below describe some of the most effective methods of achieving this.

1. Pay to the maximum annual amount.
By increasing the payment, the remaining principal continues to drop, while at the same time if the burden of payment becomes to great, most lenders will generally allow the borrower to reduce the payment to its previous level.

2. Prepayments on principal give great returns on your investment.
To put the idea of how important it is to get rid of your principal as quickly as possible; if you were to pay an average of 5.5% in mortgage interest, then for every $1,000 that your mortgage principal is reduced, you will have an after tax
savings of $55...EVERY YEAR. Lets say that you pay taxes at 45% --in that case,
you will need to earn $108.33 more to cover just the interest costs of every
$1000 remaining on your principal.

3. Increase the frequency of your payments
When choosing a payment scheme, make accelerated bi-weekly payments in order to get a "free" principal reduction which would be equivalent to one full mortgage payment every year, painlessly.

4. As a prepayment method, use your RRSP tax rebate.
By combining the refund with the tax-free interest earned on the RRSP over the subsequent years will quickly outpace the short-term interest costs of the RRSP loan.

5. As income rises, raise your mortgage payments.
While disposable income is fun to spend, putting it towards your mortgage will save you a lot of money in interest payments which will be even more fun to spend in the future.

6. Pay in lump sums wherever and whenever you possibly can.
Paying in lump sums helps decrease the principal of your mortgage thereby decreasing the life of your mortgage, and increasing your mortgage free life.

7. Round your payments up, instead of down.
Over time, by making even extra nominal payments of $20 to the principal, the amount of interest that you will be saving yourself from will amaze you.

8. If mortgage rates fall, don't reduce you payment scheme
If so far, you the payment amount has not been an issue of concern, then there is no benefit in reducing the payment amount. However there is a downside to reducing your payment being that interest payments will grow.

For more information about maximizing savings on your mortgage, or to apply for a mortgage that allows for you to take advantage of these simple suggestions, contact one of the qualified mortgage professionals at Alberta Mortgage or Apply Online.