While it may seem like a gargantuan task right now, one day you will be mortgage-free. To help that day come a little sooner, abide by some (or all) of the following steps:
1. Make a payment more than once a month.
While it may take a little bit of getting used to, paying weekly or bimonthly rather than once a month can save you thousands in accumulated interest costs and shave years off the life of your mortgage.
2. Pay the five-year fixed rate on your variable rate mortgage.
Historically speaking, variable rates have generally remained significantly lower than their five-year fixed counterparts. By employing a bit of discipline and paying the going five-year fixed rate on your variable rate mortgage, you'll likely be adding a few hundred dollars to your payment every month -- and that's going directly to your principle. Your ability to do this depends on your lenders pre-payment privileges so be sure to check with your lender to see how much you are able to pre-pay on your payments.
3. Stay away from 35-year amortizations.
While they're good to have as a back-up option -- a safety net to use if you lose your job, start a new business or go on maternity leave -- sticking with the 35-year amortization rate throughout the life of your mortgage means, well, you won't be mortgage free for another 35 years. When shopping for a home, make sure you can comfortably afford the 25-year amortization rate, and aim to use the 35-year rate as your emergency option.
If your lender allows this you could choose a 35 year amortization but pay extra every month so you're actually paying the mortgage over 25 years. This way you have the option of a lower payment should money become tight.
4. Take advantage of lump sum payments.
While very few Canadians ever make a lump sum payment on their mortgage, in most cases the option is available. If you receive performance bonuses with your current job, or if you're a commission-based employee that's raked in a little more than expected in the past year, consider placing the surplus towards your mortgage.
5. Shop around at renewal.
From term to term, mortgage rates will change. Make sure you're shopping around for the best rate possible, rather than merely re-signing with your existing lender.