If you’re a homeowner in Canada, you likely have a mortgage. Mortgages are typically the largest debt that Canadians carry, and they can take years to pay off. However, most mortgages in Canada come with prepayment privileges, which allow you to pay off your mortgage faster and save money in the long run. In this blog, we’ll discuss the benefits of taking advantage of your mortgage’s prepayment privileges.
First, let’s define prepayment privileges. Prepayment privileges allow you to make extra payments towards your mortgage principal, in addition to your regular mortgage payments. These extra payments can help you pay off your mortgage faster and save money on interest.
Now, let’s discuss the benefits of prepayment privileges:
Save money on interest: By making extra payments towards your mortgage principal, you can reduce the amount of interest you pay over the life of your mortgage. This can save you thousands of dollars in interest payments.
Pay off your mortgage faster: By making extra payments towards your mortgage principal, you can pay off your mortgage faster. This means you’ll have more equity in your home, and you’ll own your home outright sooner.
Reduce your amortization period: The amortization period is the length of time it takes to pay off your mortgage. By making extra payments towards your mortgage principal, you can reduce your amortization period. This means you’ll pay off your mortgage sooner and save money on interest.
Increase your cash flow: If you have a fixed mortgage payment, making extra payments towards your mortgage principal can increase your cash flow. This is because you’ll be reducing the amount of interest you pay, which will lower your mortgage payment in the long run.
Flexibility: Prepayment privileges offer flexibility, which means you can make extra payments when it suits your budget. You can make extra payments once a year, or more frequently if you’re able. This flexibility can help you pay off your mortgage faster without putting too much strain on your budget.
Peace of mind: By taking advantage of your prepayment privileges, you’ll have peace of mind knowing that you’re paying off your mortgage faster and saving money in the long run. This can help you feel more financially secure and confident in your financial future.
In conclusion, taking advantage of your mortgage’s prepayment privileges can help you save money on interest, pay off your mortgage faster, increase your cash flow, and give you peace of mind. If you’re a homeowner in Canada, be sure to check if your mortgage offers prepayment privileges, and consider making extra payments towards your mortgage principal. Your wallet will thank you in the long run!