Welcome back for part two of CIBC's tips to paying down your mortgage faster:
3. You use your pre-payment privilege to make a lump sum payment. A lump-sum payment is applied directly to your outstanding principal if there is no outstanding interest owing. This saves you money over the course of your mortgage.
For example, if you made a $1,000 lump-sum payment, you could save almost $28,350 in interest over the entire amortization period of your mortgage. This would allow you to own your home about four years sooner.
4. You can pay as much as possible at renewal.
For example, if you chose 5-year, fixed-rate terms, and made a $10,000 lump-sum payment every time your mortgage came up for renewal, you would save about $37,481 in interest over the entire amortization period of your mortgage, allowing you to own your home about 6 years sooner.
Source: CIBC Website
