This month, I’m sharing highlights from a recent article in Canadian Real Estate Magazine. With concerns about the economy, make the most of your investment and get ahead. Don’t take your mortgage for granted by using the following tips…
Skip the Honeymoon
Be careful of introductory offers such as low rates that reset to higher ones after a few years and cash-back offers and incentives that come with a higher interest rate. Short term gain for long term pain!
Time is Money
The best strategy for paying less interest is paying your loan as fast as you can. Most mortgages allow you to pay a lump sum of up to 25% of the original mortgage each year.
Also at each renewal the mortgage becomes an open loan, which means you can repay as much as you want without restrictions or penalties.
More Frequent Payments
In case you don’t win the lottery or find yourself with a large lump sum to put down on your mortgage, just make your payments weekly. It’s a small cash flow difference but it will save thousands on your mortgage.
With a $300,000 mortgage at 5% over 25 years, you can be mortgage-free four and half years faster and save $37,947 by simply making your payments on a weekly basis versus on a monthly basis.
Hit the Principal Early
Most mortgages allow you to pay an amount up to or equal to your regular payments that can go straight to the principal.
Switch Lenders
Shop around at renewal time but consider costs before you switch, such as appraisal fees ($150-$350), discharge statement fee ($150-$300), and legal fees ($600-$1,500).
It is well worth the effort to shop around. Half a point on a $300,000 mortgage can mean over $18,000 in interest savings.
Forgo Minor Luxuries
Consider this: A typical day of food purchases adds up: coffee and snack ($5), lunch ($12), drinks after work ($8) = $35 a day.
If you ‘bagged’ lunch and made coffee at home, assuming a savings of $20 a day x 20 days a month, you would have an extra $500 a month to put towards your mortgage.
Assuming a mortgage of $300,000 at 5% you could save $68,777 in interest and be mortgage free 9 years sooner!
In Summary
Don't take your one of your biggest investments for granted. Take a look at your mortgage today and get the most savings possible!
For more information on how you can save money on your mortgage, contact me at info@markrichards.ca or give me a call at 416.690.2181.
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