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Buying a home is the biggest investment most people make. Whether you’re a first-time buyer or refinancing your home, saving money on mortgage payments means you’ll be financially ahead. Follow these tips to help reduce your mortgage costs.

Get a competitive rate

To get the best rate, you have to shop for a mortgage. Lenders frequently give a discount off the posted rate, sometimes as little as a quarter of a percentage point or up to a full percentage. Even a small difference in the rate will make a big difference in your monthly payments. Compare rates by contacting several financial institutions. The Internet can be a great search tool in obtaining up-to-date information on rates and terms quickly.

Reduce the amortization period

Shortening the loan repayment period or amortization period is a great way to pay your mortgage off quicker. It will result in higher monthly payments, but will make big gains in building up your equity and allow you to pay less in total interest over the life of the mortgage.

Review prepayment options

A prepayment option allows you to pay part of your mortgage principal before it’s due, thus reducing the amortization period. Restrictions usually apply and can include a prepayment penalty. As well, prepayment is often limited to specific amounts and times.

Make more frequent payments

Frequent payments also save you money on your mortgage. Bi-weekly payments mean you’ll make 26 payments in a year, equal to 13 months of payments instead of 12. If you pay your mortgage weekly, instead of monthly, an amortization of 25 years will be reduced to approximately 18 years.

Increase your down payment

Providing a larger down payment will reduce your mortgage insurance cost. For example, mortgage insurance ranges from 0.5 to 3.75 per cent of your mortgage amount depending on the down payment. If your down payment is 25 per cent or more of the purchase price, mortgage insurance is not required.

Consider a short term

If you are confident that interest rates won’t rise, it sometimes pays to get the shortest-term loan you can afford. In the 1980s and1990s, a borrower choosing a one-year term and renewing each year would have saved more interest costs than someone who chose a five-year term. This is because mortgage rates have declined during this period.

Look into a variable rate

A variable rate is a mortgage with an interest rate and payments that can change over the term of the loan based on the current interest rate.

It is important to look into all your options when choosing a mortgage that will best suit you. Your REALTOR® will be able to recommend a mortgage consultant or lending institution.d