Stats Canada recently reported that home ownership in Canada has increased from 60% of families in 1999 to 63% in 2016. That’s good news for the Canadian economy and most families, but the bad news is the number of families who have paid off their mortgage has decreased from 46% to 43%. During this study period we saw record low interest rates, so in theory we should have had an advantage paying off our mortgages?
For example, on a $300,000 mortgage, if you switch from monthly payments to accelerated bi-weekly payments (half your monthly payment paid every second Friday) you reduce your mortgage over a 5 year term by an additional $7,492 and take 2.5 years off the life of your mortgage. The best thing about bi-weekly payments is you end up paying 1 extra monthly payment a year, but it’s broken out over 26 payments, so you really don’t notice the difference until you see the massive savings!
I also encourage clients to take advantage of increasing their payments or putting lump sums down when they have a little extra cash, like when you receive your income tax return or annual bonus. A little extra can mean a lot over time, even small amounts compound over time into large savings.
If you want to discuss how you can pay down your mortgage faster call me for a mortgage review today.
Don’t sign that Mortgage Renewal – talk to us First!
Daryl French, AMP