Most mortgages allow optional payments on a weekly or bi-weekly basis. This will enable you to pay off your mortgage approximately four years sooner, dramatically saving you money. It can also simplify your budgeting if you are paid weekly or bi-weekly.

We select mortgage companies that allow privilege payments; over time, this can save you a great deal in interest. Making a 20% privilege payment will allow you to pay off up to $20,000 per year on a $100,000 mortgage. You should also look for the flexibility to pay smaller amounts as often as you wish. If you are periodically able to pay an extra $1000 on the mortgage, you will become mortgage-free faster.

A mortgage of more than 75% of the purchase price of a property must be insured by Canada Mortgage and Housing (CMHC) or GE Mortgage insurance. As the down payment increases premiums decrease. Financing your property at 95% adds a premium of 2.75% to your mortgage. Increasing your down payment to 10% of the purchase price reduces the premium to 2.5%, and a 25% down payment eliminates it altogether.

In addition to reducing the CMHC fees mentioned above, a larger down payment will lower the amount of interest you will pay over the life of your mortgage. Be aware, though, that there is a downside: if you stretch yourself to increase your down payment you may end up borrowing on credit cards or a line of credit at a higher interest rate.

Mortgages can vary between variable and fixed rate, 6-month terms to 10-year terms. Depending on the marketplace and the economy, the shorter the term or guarantee of the rate, the lower the rate will be. Variable rates offer strong potential for interest rate savings, although you are accepting the interest rate risk without a guarantee. Consider your risk tolerance and your cash flow, and seek the advice of an expert.