Mortgage Refinancing Services in Newmarket, ON
Equity is a powerful thing. Many individuals will refinance their home to send their kids to school, do that big renovation, consolidate debt or go on that trip of a lifetime. Big expenditures can take a toll on cash flow but by refinancing, you can leverage your equity and not be cash poor. Understanding refinancing options and the costs associated with it is key. Centum One Financial is here to walk you through every step of the process.
PAY OFF YOUR MORTGAGE FASTER
Using your mortgage prepayment options can drastically reduce the total amount you spend on your mortgage and shorten the time it takes to pay it down. Even paying a little more each month can make a huge difference.
Anytime you increase your payments, the excess that you pay per payment goes directly into the principal portion of your mortgage. This is a great way to drastically reduce the interest you will have to pay over the term of your mortgage.
Typical prepayments allow you to add between 10% to 20% of your payment amount to each payment, depending on your lender. Let’s say you just paid off a loan and now have those additional funds available each month.
Here’s an example of prepayments being used on a typical mortgage:
All calculations are based on a $400,000 mortgage with a 5 year term and 25 year amortization at a rate of 2.59% with monthly payments.
Monthly payments: $1,809.84
Principal paid over 5-year term: $60,836.51
Interest paid over 5-year term: $47,753.89
Mortgage amount remaining: $339,163.49
Years remaining on mortgage after 5 years: 20 Years.
Adding a 15% Prepayment:
Monthly payments: $2,081.32
Principal paid over 5-year term: $78,201.00
Interest paid over 5-year term: $46,678.20
Mortgage amount remaining: $321,799.00
Years remaining on mortgage after 5 years: 15 years & 9 months.
As you can see, the mortgage was reduced by $17,364.49 and saved $1,075.69 in interest! The mortgage term was reduced by 4 years and 3 months in only 5 years! All for an additional $271 per month.
Making a large payment can be a great option for paying down your mortgage. Whether it’s a Christmas Bonus, an inheritance or maybe even pulling an amount from an investment, lump sum payments help you reduce the amount of interest you will be required to pay on your mortgage.
If you decide that prepayments are for you, you can achieve mortgage freedom sooner than ever!
Contact us and let’s set your goals into motion.