Let's Talk House Episode 17: 7 Mortgage Hacks That Could Save You Thousands in Canada

Looking to pay off your mortgage faster while keeping your lifestyle intact? In this episode of Let’s Talk House, host Lei Villar-Cisneros breaks down 7 smart, proven strategies to save thousands in interest, shorten your mortgage term, and build financial freedom—right here in the Greater Toronto Area. Whether you're a first-time buyer or seasoned homeowner, this episode is packed with actionable tips and expert insights.

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Transcript

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What if I told you there are simple ways to cut years off your mortgage and save tens of thousands of dollars without making huge sacrifices? Let's dive in. Only here at Let's Talk House, your go-to source for all things real estate, mortgage and beyond in the Greater Toronto Area in Canada. Welcome home. I'm your host, Ley Villar-Cisneros. Today, we're talking about seven smart strategies to optimize your mortgage, boost your savings, and even pay off your home years earlier. With interest rates still fluctuating and home prices adjusting in the GTA, smart mortgage management is more important than ever. So if you're a homeowner or planning to become one soon, these steps are going to be game changers for you. Let's jump right in. Strategy number one, make biweekly payments instead of monthly payments. Did you know that just by adjusting your mortgage payment from 12 full payments per year to 26 half payments, you'll be stashing one extra full payment a year, chipping away at your principal faster and saving thousands in interest over time without even dipping into your savings? Smart, eh? This is possible because when you make payments in your mortgage, it goes first to the interest. Then whatever is left goes towards your principal. So if you structure your mortgage payments into biweekly and keeping the same payment just by splitting it into half, you'll be paying less interest and more into the principal. Your bank won't tell you this. So starting today, try to arrange with your lender an accelerated biweekly payment. That's what this strategy is actually called. To give you an example, let's say your monthly payment mortgage is 1,000 bucks. If you split that into 500 and paying the next half exactly two weeks from today and keeping this until you finish your term, you'll be able to save one month worth of principal. Now, that's smart. Over time, this will convert into seven years of savings if you keep up with it. Strategy number two, round up your payments. If your mortgage payment is, for example, 1,543, round it up to 1,600 or even 1,700 if possible. Those few extra dollars add up big over the years, shaving time and interest off your mortgage. Strategy number three, you slump some payments. Did you know that you may prepay your principal up to a maximum of 10, 15, or even 20% depending on the lender? Check your contract. So if your original mortgage balance is 1 million, for example, then you may prepay up to$200,000 in a year. If you can actually do that, you'll be paying off your mortgage in just five years. Wow! Well, you might be asking, where in the world will I get that kind of money, Leigh? Think about it. Are you expecting a tax refund, bonus at work, extra cash, whatever that is? No matter how small or big that is, applying that money directly to your principal can significantly reduce your balance. Many mortgages allow annual payments. lump sum payments so use that feature actually when you check for a mortgage you should ask for this because this can save you a lot strategy number four refinance to a better rate but wisely if interest rate dip or you qualify for a better rate based on your improved credit Refinancing can lower your payment or shorten your amortization. However, if you're pulling the equity money and stashing it somewhere other than your mortgage, then it will actually backfire. If you are planning on refinancing to get a better rate, be careful and make sure that you factor in penalties and fees before jumping in. Talk to your mortgage broker before diving into this strategy. This might actually work in this situation we're in now, that interest rates are going down. If you're currently on a variable rate mortgage, then it's easy to just do this because the penalty might be just three months interest. There are, however, some lenders that have different penalty calculation, even if you are on variable rate. Be sure to check and compute and ask a lot of questions on this. before diving in we're now moving to strategy number five shorten your amortization period amortization period is the life of your mortgage that's usually starting from 25 or 30 years in canada if everything is the same as today and your amortization is for example 25 years It means you'll finish paying off your mortgage in 25 years. When possible, opt for a 20-year instead of a 25-year term. Yes, the monthly payments are slightly higher, but you'll save a fortune in interest and become mortgage-free faster. Strategy number four, refinance to a better rate, but wisely. If interest rate dip or you qualify for a better rate based on your improved credit, refinancing can lower your payment or shorten your amortization. However, if you're pulling the equity money and stashing it somewhere other than your mortgage, then it will actually... backfire if you are planning on refinancing to get a better rate be careful and make sure that you factor in penalties and fees before jumping in talk to your mortgage broker before diving into this strategy this might actually work in this situation we're in now that interest rates are going down if you're currently on a variable rate mortgage then it's easy to just do this cause the penalty might be just three months interest. There are, however, some lenders that have different penalty calculation, even if you are on variable rate. Be sure to check and compute and ask a lot of questions on this before diving in. We're now moving to strategy number five, shorten your amortization period. Amortization period is the life of your mortgage. That's usually starting from 25 or 30 years in Canada. If everything is the same as today and your amortization is for example 25 years, it means you'll finish paying off your mortgage in 25 years. When possible, opt for a 20-year instead of a 25-year term. Yes, the monthly payments are slightly higher, but you'll save a fortune in interest and become mortgage-free faster. Now, there's a disadvantage to this strategy. Say, if you lose your job and you're paying the higher mortgage, then it might hurt a bit. So, implementing your current amortization and just paying more to the principal will have the same effect as this strategy, but different. And if you run into financial difficulty, then less is better for the tight budget. Many lenders offer re-advanceable mortgages where you can borrow back what you've paid down. This is also known as HELOC or Home Equity Line of Credit. HELOC gives you more freedom for emergency or investing purposes because the less mortgage you have, the more room you have to borrow without having to reapply. Tempting, right? Yes. Helpful for mortgage freedom? No. Stay disciplined and treat your mortgage like a one-way street. Pay it down and move forward. Last but not the least is strategy number seven. Make one extra full payment per year. Even one extra payment annually can knock off years on your mortgage. Set a goal to pay a bit more around bonus time, year end, or even your birthday. Your future self will thank you. Personally, I used double up in the past. This is when you pay an extra payment equal to the principal amount every month. But when I became a parent, there were so many expenses that I cannot cope up. Then I did an extra$100 per payment. To give you a quick recap on the seven strategies to save on your mortgage, number one, biweekly payments, number two, roundup payments, number three, lump sum boosts, Number four, strategic refinancing. Number five, shorter amortization. Number six, no reborrowing. And finally, number seven, one extra payment per year. Each of this alone can make a real impact. If you put them all together, you'll be amazed how much faster you can be mortgage-free, even in today's challenging market. So let me know in the comment below which strategy you have done or planning on doing and come back in a year and comment back how much money you have saved just by doing this. Start with just splitting your mortgage into bi-weekly accelerated payment, then maybe adding$100 to a pay schedule. If that feels easy-peasy, then put it on a regular basis. You'll be amazed how much you saved. Well, folks, that's all the time I have today. My name is Ley Villars-Cisneros, and this is Let's Talk House.

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Let's Talk House

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You've been listening to Let's Talk House Podcast, your go-to source for all things real estate, mortgage, and beyond in the Greater Toronto Area in Canada. Be sure to press the follow button so you won't miss an episode. Also, subscribe to my YouTube channel, follow me on Instagram, and Facebook at Leyvilar Real Estate. As always, thanks for listening, and we'll see you next time. time.