Let’s say you are getting a mortgage and know that in a few months or a year you will get a big bonus or access to a significant amount of cash – maybe sell a different property or get an inheritance. And you would prefer to use this money to partially pay off your mortgage.
There are many lenders out there who allow you to pre-pay your mortgage and depending on the lender conditions will be different. For example, some mortgages have an option to pay a one-time 15% or 20% lump sum per year. All this money will go towards your principal, which means that you might be able to pay off your mortgage faster and pay less interest in the long run. And because it’s part of your contract with the l ender there won’t be any penalties.
Another option is to increase your payment by for example 15% or 20%, which will also go towards paying off your principal.
Mortgages can be complicated, and not only because there are different options for amortization, interest rates and downpayment, but also because every mortgage product is created for different situations. It’s important to understand these opportunities because they can make a significant financial difference and potentially help you save money. With access to different mortgage products and lenders, your mortgage agent can help you find a solution that works for you.
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