Mortgage Free Faster

Marci • March 11, 2013

Owning a home is one of the cornerstones a financial plan. However, making mortgage payments for 20 to 30 years can take a huge bite out of your budget, even with low interest rates.

A $300,000 mortgage at 3.29 per cent, amortized over 30 years will cost $161,300 in interest. That is if you keep it for the 30 years and our goals is to try to make it end much earlier.

 

There are 3 easy ways to start taking the years off:

 

1. Make a lump sum payment

A lump sum payment reduces your outstanding principal.  The sooner you can make a prepayment, the less interest you’ll pay over the long term. Your mortgage contract will state how much pre-payment you are allowed to make without penalty. Most are 15-25% of the original mortgage amount and you can pay this annually.

 

Coming up with a large lump sum – up to $75,000 on a $300,000 mortgage – is huge and most people cannot do this annually. Even a small sum   can reduce your overall interest amount.

 

2. Increase the amount of your payments

Paying an extra $100 a month on a $300,000 mortgage at 3.29 per cent over 30 years will save you more than $11,000 in interest and reduce the amortization by 3 1/2 years. If $100 is too much, just start with $25 and work your way up.  Check your mortgage contract to see if there are rules about how often you can increase your payments without paying a fee.

 

3. Make more frequent payments

Financial institutions offer a number of payment options. The standard ones are:  monthly, semi-monthly, bi-weekly and weekly. I recommend that you line your payments up with the way you get paid.

 

If you decide to make more frequent payments, make sure you choose an accelerated option.  Accelerated weekly and bi-weekly payments can save you thousands because you’ll make the equivalent of one extra monthly payment each year.  If you do not get paid bi-weekly, I have found that you should not do bi-weekly since it is really easy to miss a payment.

 

There is very little extra savings if you just switch to a more frequent payment without taking the “accelerated” option.

 

On the same $300,000 mortgage as above, a bi-weekly payment will save $289 in interest over the life of the mortgage. On the other hand, with an accelerated bi-weekly payment (an extra $50 per payment) you’ll save more than $18,000 over the life of the mortgage.

 

You can save thousands in interest by paying off your mortgage as fast as your budget allows.  Choose any one, all, or a combination of the prepayment options available to you. Contact your mortgage broker to review your budget and to figure out your mortgage plan, then check with your lender to verify your pre-payment options and any penalties or fees you may be required to pay.

Contributed by: Gina Knows Best www.ginaknowsbest.com

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By Marci Deane • March 11, 2026
Thinking About Buying a Home? Here’s What to Know Before You Start Whether you're buying your very first home or preparing for your next move, the process can feel overwhelming—especially with so many unknowns. But it doesn’t have to be. With the right guidance and preparation, you can approach your home purchase with clarity and confidence. This article will walk you through a high-level overview of what lenders look for and what you’ll need to consider in the early stages of buying a home. Once you’re ready to move forward with a pre-approval, we’ll dive into the details together. 1. Are You Credit-Ready? One of the first things a lender will evaluate is your credit history. Your credit profile helps determine your risk level—and whether you're likely to repay your mortgage as agreed. To be considered “established,” you’ll need: At least two active credit accounts (like credit cards, loans, or lines of credit) Each with a minimum limit of $2,500 Reporting for at least two years Just as important: your repayment history. Make all your payments on time, every time. A missed payment won’t usually impact your credit unless you’re 30 days or more past due—but even one slip can lower your score. 2. Is Your Income Reliable? Lenders are trusting you with hundreds of thousands of dollars, so they want to be confident that your income is stable enough to support regular mortgage payments. Salaried employees in permanent positions generally have the easiest time qualifying. If you’re self-employed, or your income includes commission, overtime, or bonuses, expect to provide at least two years’ worth of income documentation. The more predictable your income, the easier it is to qualify. 3. What’s Your Down Payment Plan? Every mortgage requires some amount of money upfront. In Canada, the minimum down payment is: 5% on the first $500,000 of the purchase price 10% on the portion above $500,000 20% for homes over $1 million You’ll also need to show proof of at least 1.5% of the purchase price for closing costs (think legal fees, appraisals, and taxes). The best source of a down payment is your own savings, supported by a 90-day history in your bank account. But gifted funds from immediate family and proceeds from a property sale are also acceptable. 4. How Much Can You Actually Afford? There’s a big difference between what you feel you can afford and what you can prove you can afford. Lenders base your approval on verifiable documentation—not assumptions. Your approval amount depends on a variety of factors, including: Income and employment history Existing debts Credit score Down payment amount Property taxes and heating costs for the home All of these factors are used to calculate your debt service ratios—a key indicator of whether your mortgage is affordable. Start Early, Plan Smart Even if you’re months (or more) away from buying, the best time to start planning is now. When you work with an independent mortgage professional, you get access to expert advice at no cost to you. We can: Review your credit profile Help you understand how lenders view your income Guide your down payment planning Determine how much you can qualify to borrow Build a roadmap if your finances need some fine-tuning If you're ready to start mapping out your home buying plan or want to know where you stand today, let’s talk. It would be a pleasure to help you get mortgage-ready.