{"id":292,"date":"2012-10-24T15:33:24","date_gmt":"2012-10-24T22:33:24","guid":{"rendered":"http:\/\/www.themastersgroup.ca\/blog\/?p=292"},"modified":"2012-10-24T15:33:24","modified_gmt":"2012-10-24T22:33:24","slug":"paying-off-your-mortgage-faster-10-quick-tips","status":"publish","type":"post","link":"https:\/\/www.ingridjarisz.com\/blog\/paying-off-your-mortgage-faster-10-quick-tips\/","title":{"rendered":"Paying Off Your Mortgage Faster – 10 Quick Tips"},"content":{"rendered":"

\"\"<\/a>Don\u2019t waste your hard-earned money on interest! <\/strong><\/p>\n

These methods have allowed many people to shorten their mortgage life by years in a very short period and enjoy a greater lifestyle for a longer period.<\/p>\n

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One of the highest financial priorities of Canadian homeowners is to pay off their mortgage as quickly as possible. Paying down extra principal in the early years can shorten the life of your mortgage \u2014 and dramatically lower the interest you\u2019ll pay over the long haul. \u201cPay-Off Tips\u201d below describes some of the most effective methods of achieving this.<\/p>\n

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T<\/strong>IP #1: <\/strong>MORTGAGE \u00a0PAYMENTS \u00a0MADE WITH AFTER TAX CASH<\/p>\n

More Canadians are becoming aware that since mortgage interest is not tax-deductible in Canada you are making mortgage payments of both principal and interest with money that you\u2019ve already paid tax on \u2014 \u201cafter tax dollars\u201d. This makes it even more important to eliminate the drainage of disposable income as soon as possible!<\/p>\n

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T<\/strong>IP #2: <\/strong>PREPAYMENTS GIVE GREAT RETURN ON INVESTMENT<\/p>\n

For example, \u00a0if you pay an average of 4% in mortgage interest, for each $1,000 by which you reduce your mortgage principal, you will save $40 in after tax cash every year. If you are paying taxes at a marginal rate of 40%, you have to earn $66.67 each year to pay the interest on every $1,000 of principal outstanding…a heavy burden, but also a tremendous implied benefit to reducing this balance. In fact, the example shows that the \u201creturn on investment\u201d for making prepayments on your mortgage is 6.67% before tax and 4% after tax \u2014 far better than most fixed return investments (bonds, \u00a0GICs, etc.).<\/p>\n

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T<\/strong>IP #3: <\/strong>INCREASE YOUR PAYMENT ANNUALLY TO THE MOST YOU CAN AFFORD<\/p>\n

The upside is that most lenders will allow you to reduce it again to the previous level if it turns out to be too great a burden or your circumstances change.<\/p>\n

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T<\/strong>IP #4: <\/strong>UTILIZE YOUR RRSP-DRIVEN TAX REBATE AS A MORTGAGE PREPAYMENT METHOD Even if you can only prepay annually, make sure these funds are set aside for that purpose. Many Canadians will borrow (at prime) to buy \u00a0an RRSP to ensure the maximum rebate. When applied to the mortgage principal, this refund is a \u201cgift that keeps on giving\u201d. Combining the refund with the tax-free interest earned on the RRSP over \u00a0the subsequent years will quickly outpace the short-term interest costs of the RRSP loan.<\/p>\n

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T<\/strong>IP #5: <\/strong>INCREASE THE FREQUENCY OF YOUR PAYMENTS<\/p>\n

Make accelerated bi-weekly payments to get a \u201cfree\u201d principal reduction equivalent to one full mortgage payment every year \u2014 painlessly. Unless you are paid weekly it makes little sense to make weekly payments. All you\u2019d be doing is making a smaller payment, and deferring the difference for a week.<\/p>\n

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T<\/strong>IP #6: <\/strong>MAKE USE OF DOUBLE-UP PRIVILEGES WHEREVER POSSIBLE<\/p>\n

Tell yourself that you will \u201cskip-a-payment\u201d whenever necessary… then skip only when you absolutely must.<\/p>\n

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T<\/strong>IP #7: <\/strong>ROUND YOUR PAYMENTS UP<\/p>\n

By adding even a nominal amount of say, $10 per payment, the amount of interest you are saving will be unbelievable, and the extra money relatively painless to part with.<\/p>\n

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T<\/strong>IP #8: <\/strong>PAY A LUMP SUM WHENEVER POSSIBLE<\/p>\n

By decreasing the principal of the mortgage, your payments will not be allocated as much to interest in the future, thereby accelerating your freedom to mortgage-free life.<\/p>\n

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T<\/strong>IP #9: <\/strong>KEEP PAYMENTS THE SAME WHEN MORTGAGE RATES HAVE FALLEN<\/p>\n

If the payment amount has not been a problem so far, then keep it the same thus paying down the principal faster.<\/p>\n

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T<\/strong>IP #10: <\/strong>RAISE PAYMENTS IN LINE WITH INCREASED INCOME ON AN AFTER-TAX BASIS<\/p>\n

If your income increases, don\u2019t keep your mortgage payments the same. Although the disposable income may be fun to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster and saving those interest payments will far outweigh the short-term curtailing \u2014 just pretend that your income did not increase and maintain your usual lifestyle.<\/p>\n","protected":false},"excerpt":{"rendered":"

Don\u2019t waste your hard-earned money on interest! These methods have allowed many people to shorten their mortgage life by years in a very short period and enjoy a greater lifestyle for a longer period.   One of the highest financial priorities of Canadian homeowners is to pay off their mortgage as quickly as possible. Paying  Continue Reading »<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[33,11,40,4],"tags":[35,67,41,69,13],"_links":{"self":[{"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/posts\/292"}],"collection":[{"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/comments?post=292"}],"version-history":[{"count":9,"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/posts\/292\/revisions"}],"predecessor-version":[{"id":302,"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/posts\/292\/revisions\/302"}],"wp:attachment":[{"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/media?parent=292"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/categories?post=292"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ingridjarisz.com\/blog\/wp-json\/wp\/v2\/tags?post=292"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}