There's a reason why we're so anxious. On a $100,000 mortgage at seven per cent amortized over 25 years, you'll pay more than $110,000 in interest. That's in after-tax dollars. In gross terms—and I mean that in every way possible—your mortgage can actually more than double the cost of your home. And unlike our U.S. cousins, who get to deduct their mortgage interest on their tax return, we're stuck paying tax on every penny, which makes our mortgages very, very expensive.
Want to burn through your mortgage faster? Your best bet is to pay more now to save big later on. Here are some easy ways to fast-track your payments and save money:
With a little foresight, fast-tracking your mortgage can be relatively painless. So, start planning your mortgage-burning party now!
Easy money Where to find extra dough: Cut back on the lattes By adding even a nominal amount to each payment, you'll reduce the amount of interest you pay over the long term. An additional $25 a month, for example, will save about $11,000 in interest down the road. Contribute to your RRSP If you're in the 40 per cent tax bracket and you make a $2,500 contribution to an RRSP, the taxman could refund you $1,000—money you can use to prepay your mortgage. Pay off a loan and swing the payment to your mortgage Whether you just got a raise or finished paying off your student loan, if you've just got some extra money in your cash flow, it's time to increase your mortgage payment. I'm referring to the feature on many mortgages that allows you to up the amount you pay monthly, with the entire increase going to pay off your principal. Just make sure your mortgage lender will let you go back to your previous level if your circumstances change. |
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