of Lloydminster

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RE/MAX Of Lloydminster
5726 - 44 Street
Lloydminster, AB
T9V 0B6

"each office independently owned and operated"

 

Most mortgages are taken out for 15- to 30-year periods. However, this shouldn't stop you from paying off your mortgage early if you come into the extra money. You can also save money off of interest and pay off the mortgage sooner if you take out a 15-year loan, but this means that you'll be paying much more on a monthly basis than if you had a 30-year loan. This means that you'll want to figure out what you can afford while still being able to pay off the loan early if possible. The following are four ways that you can pay your mortgage off early.



.Refinance your mortgage - You can save a decent chunk of money by refinancing your mortgage if the interest rate drops at a significant enough rate and you have a fixed-rate mortgage. How does it work? Basically, you're taking out a second loan in order to pay off your first loan, which means that the terms of the second loan have replaced those of your first. If the interest rate drops by a single percentage point, you could end up lowering your monthly payments by a couple of hundred dollars. Of course, the actual number you'll save depends on how big the loan was and what the new interest rate is compared to the old interest rate. In some cases, refinancing your mortgage won't be worth it since you won't save that much money on a monthly basis - and the loan period resets. So if you are refinancing your 30-year fixed rate mortgage two years in, you'll end up taking 32 years to pay off your loan when all's said and done. The advantage of refinancing, though, is that you can take the money you are saving every month and apply it to your mortgage payments, thereby paying it off sooner. One thing to keep in mind is that some lenders may charge a penalty for paying off your mortgage early - so be sure to ask about this before refinancing to make sure the penalty is worth the trouble.


.Pay extra every month - If you have a fixed-rate mortgage, then you'll have to make the same payment every month for the duration of your term. However, there's no reason why you can't pay more than this. Paying an extra $100 or $200 a month for the duration of your loan can help you save money on interest as well as help you pay your loan off early. However, if you get to the point where you can pay a substantial amount more every month on your 30-year mortgage, you may want to just consider refinancing to a 15-year mortgage.


.Make payments twice a month - Mortgage payments are required once a month, but that doesn't mean that you are limited to only making that single payment a month. By simply splitting your monthly payments in half and paying them every other week, you can end up paying your 30-year mortgage off four years early. This is because you'll end up making 26 mortgage payments a year, which is equal to 13 months - one more month than is required, and it shouldn't affect your budget by much since you're just splitting your regular monthly payments into two. Not only will you end up paying a little extra towards your loan every year, you'll also end up saving a ton of money in interest payments, all of which combine to contribute to being able to pay off your 30-year loan in roughly 26 years.


.Make large one-time payments - There are times where you may get a large influx in income, whether it's because you've inherited some money or received an end of the year bonus from work, just to name a few examples. Making a few large one-time payments, you can end up saving tens of thousands of dollars in interest while also paying off your mortgage a few years early. Some lenders may even be willing to lower your monthly payments after you've made a large one-time payment as well - just be sure to ask your lender if they are willing to do this before you take out a mortgage.


Nobody likes being in debt and nobody likes paying thousands of dollars in interest. These are four ways that you can not only pay your mortgage debt off early, but also reduce the amount of money you would have ended up paying in interest.


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Debt. It's something almost everyone will have at some point in their life. But what happens when your debt begins to get the better of you? What options are available? Some simple strategies can help you get your debt out of a seemingly unmanageable situation; it's just a matter of choosing the right one for you.

 

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One common debt issue is having multiple credit cards but feeling like you're getting nowhere in paying them off, even when you're making payments larger than the minimum. People tend to get caught up in making sure they pay all their cards off at the same rate, regardless of balance owing or interest rate. The solution is to prioritize your debt.

 

Select the card you want to pay off first and focus your efforts on it. Keep making the minimum payments on your other cards; you don't want to damage your credit rating by having late or delinquent payments reported on your credit history. For example, if you have three credit cards and are paying a sum over the minimum payment on all of them, take the extra amount you're paying on the other two, and focus on the one you want to eliminate first. This should be the one with the highest interest rate. Once it's paid off, refocus on the next, including the amount you'd been paying on the now paid off card. Doing this will feel slow at first, but will give you a feeling of accomplishment as you pay off each debt.

 

Another option is to sit down with your bank or credit card provider and discuss lower interest options. If your rating is still healthy, most banks will switch between different credit cards, such as moving from a cash back card to a lower interest card. Others will lower your interest rate. Keep in mind, if you don't ask, the answer is automatically "no".

 

You can also look at debt consolidation loans. By using your home’s equity, you can consolidate your higher interest rate debt into a well-planned mortgage. One important strategy is knowing “good debt” from “bad debt”. Work with an experienced professional in the area!

 

 

Your last option is to declare bankruptcy or to complete a consumer proposal. A consumer proposal will allow you to retain more assets than a bankruptcy, but both will effectively destroy your credit rating. If this happens, you will not be able to apply for credit from anyone but a high risk, high interest lender until seven years from the completion of the consumer proposal or discharge of the bankruptcy.

 

When dealing with debt there are several solutions. The key is to recognize when your debt is becoming a problem and take action. The longer you wait to deal with the problem, the fewer options you will have available to you. If in doubt, speak to an experienced advisor. A meeting will cost you nothing but time, and could provide you with some direction as to what is the best option for you.

 

Your solution could potentially be a combination of all of these strategies. Sitting down with an an experienced professional will help you determine whether a prioritized payment strategy, restructure of debt, consolidation, or a mix of the three are going to be the best fit for you. Most importantly, you must act before you get to the point where Bankruptcy becomes your only option.

 

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