Accelerating mortgage payments saves money
Many Canadian homeowners are putting compound interest in its place by accelerating their mortgage payments, potentially knocking years off their repayment schedules.
There are several different approaches you can use to pay your mortgage off faster than expected. A recent report from the Canadian Association of Accredited Mortgage Professionals (CAAMP) states that approximately 36 percent of Canadians increased payments to their mortgage in the previous year. They achieved this by increasing monthly payments, switching to a bi-weekly accelerated payment plan or making lump sum payments to the mortgage. Some mortgage holders surveyed indicated they combined more than one of these practices to bring them closer to being mortgage-free.
It is important to note the terms of your mortgage before adopting one of these procedures. Every mortgage has a set amount (15 to 20 percent in most cases) that can be payed down without incurring a penalty. It is a good idea to consult your Mortgage Agent if you have questions about the specific terms of your mortgage.
This information is welcome news for those concerned about potentially rising mortgage rates. Another recent survey indicates that close to 60 percent of Ontario residents polled can comfortably afford a 2 percent mortgage rate increase.
Read the full article from the Ottawa Citizen here.