When considering making extra payments on your mortgage, here are some things to know. The biggest factor to consider is the amortization period or length of the mortgage. Most mortgages are between 25 and 30 years in length. If you've been making regular payments for 10 years on a 25-year mortgage you will have 15 years left, right?

If you have made extra payments on your mortgage within the first 5 to 10 years this will save you far more money than making extra payments on your finale 5 to 10 years of your mortgage.  Basically, we can put it like this, the more you owe the greater impact your extra payments will make.

The next factor to consider is your interest rate. Your rate will tend to change many times throughout the life of your mortgage and will be divided up by the term lengths you choose.  Paying down your mortgage with lump sum payments is most beneficial when your amortization is high.

There is also an option to increase your monthly payments, which is a great way to save thousands of dollars of interest, and if this is done throughout your entire mortgage could reduce the life of your mortgage by multiple years.

To summarize, it is going to benefit you the most to pay down your mortgage when both the amortization and interest rates are high. Although it can be hard to choose between investing or paying down your mortgage, you can always view your mortgage interest rate as an absolute return which is usually better than the GIC options. 

If you would like to discuss your mortgage terms and different repayment adjustments that are available to you don’t hesitate to call us, we are always happy to help in anyway we can.