News & Views
If you had some extra money in the bank, how would you best put it to use? Stashing it away for a rainy day is one idea, while investing it could reap financial rewards. Another sensible option is to take advantage of mortgage prepayment options, if they are available to you. Some mortgages offer the benefit of flexible prepayment options that allow lump sum payments on top of your regular mortgage payments.
Since a dollar saved is as good as a dollar earned, mortgage prepayments can be a better alternative than other sorts of investments if you have a little extra money available. Unlike putting money in the stock market, a mortgage prepayment gives you a guaranteed return in terms of interest you won’t have to pay. Think of prepayments to your mortgage like a tax-free guaranteed investment.
ING DIRECT's unmortgage® gives you the freedom to increase your regular payments by up to 25% of the original payment amount. You can also make lump sum payments throughout the year totaling up to 25% of your original mortgage amount. No need to wait for your anniversary date - you can prepay on any regular payment date. This is a huge benefit to you because it enables you to 'unmortgage' yourself sooner, and saves you money on interest in the long term.
For example, if you added $50 to each bi-weekly payment towards a $200,000 mortgage amortized over 25 years at current rates, you'd be mortgage-free 3 years sooner and save almost $17,000 in interest.
Another way to get mortgage-free sooner is to increase your payment frequency. By accelerating your mortgage payments, you’ll end up saving a bundle in interest as more money will be applied to your principal. If you can afford it, increasing your payment frequency is worth considering.
Find out how much you could save with these options by using our handy payment calculator. Combined with our low interest rate, these options could help you save thousands of dollars in interest and help you own your home sooner.
Tips
When you’re buying a resale home, it might be worth looking into whether the existing mortgage on the property is Assumable, which means that it can change hands along with the house. This could be of great benefit to you as the buyer, especially if the interest rate on that mortgage is lower than what is currently being offered in the marketplace.
