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How to Become Mortgage-Free Faster

If you have recently bought your first home — congratulations! It is a milestone worth celebrating and one that may have been a number of years in the making while you saved up your down payment and searched for the perfect place. Now that you are settled in your home, your mind may have wandered back to your finances and the monthly mortgage payments that you have committed to. Looking to become mortgage-free faster? There are benefits to paying off your mortgage off quicker, with the main one being that you will pay less interest in the long run. Take a look at our expert tips below:


Accelerate your payments

You are currently likely making monthly mortgage payments. However, if you switch to a bi-weekly schedule, you could pay down your mortgage faster while incurring less interest and also shortening your amortization period. With monthly payments, you are making 12 payments per year. On an accelerated bi-weekly payment schedule you would be making the equivalent of 13 full-size payments per year. This may not seem like a lot but it will certainly help you to pay off your loan earlier.


Increase your payments

Once you have been living in your home for a while and have a good handle on your monthly finances, you may find that you have some additional cash per month that you would like to contribute to your mortgage. Increasing your regular payments, even by $50 a month, will help you pay down your mortgage that much quicker. Make sure to discuss this option with your mortgage broker. Your mortgage may have restrictions on when you can make changes and how much you can raise your payments by.


Make additional payments

Though your mortgage payments are often fixed, you may be able to make additional payments towards your principal. For instance, when you come into larger sums of money, such as a work bonus or inheritance. This would depend on the nature of your mortgage and the prepayment privileges. By making additional lump-sum payments to your mortgage, you will be able to pay it down quicker and shorten the amortization period.


Shorten your amortization schedule

The amortization schedule of your mortgage is the time frame in which you have to pay the entire amount of the financing based on a set of fixed payments. Often the amortization period is set at 25 years, but shorter schedules are available depending on qualifications and your desire to do so. A shorter period means that your payments would be higher over that term, but your interest will be less.


The most important thing to remember is not to overstretch yourself financially, and to only commit to payments that you are able to make. Talk to your Capital Mortgages broker or agent to discuss your current financial situation and your future financial plans, to determine what is best for you long term and how you might be able to become mortgage free-faster.


6 Myths and Facts of Reverse Mortgages


Over years of owning a home and making mortgage payments, you’ve built a nicely-sized nest egg of home equity. However, that portion of your net worth is essentially untouchable until you choose to move or sell your home. A reverse mortgage allows you to borrow against your home’s value to pay off existing debt, make home improvements or cover other expenses.


Reverse mortgages are considered “reverse” because instead of making mortgage payments, the loan provides payment to the borrower. Borrowers can receive funds in installments or one lump sum, and also have the flexibility to repay the principal and interest in full at any time. Here are some common “myths” and facts about reverse mortgages:


1) MYTH: Anyone can get a reverse mortgage.

FACT:  Only Canadian homeowners 55 or older can get a reverse mortgage. Other qualifications include your property type, location and market value.


2) MYTH: To get a reverse mortgage, your home must be completely mortgage-free.

FACT: You don’t need to be completely mortgage-free to get a reverse mortgage. In fact, some borrowers use reverse mortgages to pay off existing mortgages and debts.


3) MYTH: I will have to pay taxes on the money I receive.

FACT: All money you receive for a Canadian reverse mortgage is tax-free. These reverse mortgages don’t affect Old Age Security or other government benefits you may already be receiving.


4) MYTH: I will have to make monthly payments on what I borrow.

FACT: You don’t have to make monthly payments on the money you borrow (interest or principal payments alike) until you choose to move or sell your home.


5) MYTH: A reverse mortgage will allow me to borrow without limits.

FACT: A reverse mortgage allows you to borrow up to 55% of your home’s value. This protects a borrower from borrowing too heavily against a home’s value.


6) MYTH: I may be forced to move as a result of a reverse mortgage.

FACT: Because you aren’t required to make monthly payments, you’ll never be required to sell or move as a result of changing home values. The amount you will eventually have to repay won’t exceed the fair market value of your home when it’s sold (provided you properly maintain your property).


Interested in figuring out if a reverse mortgage is right for you? Contact Capital Mortgages today to learn more about reverse mortgages and get a free quote.