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Coming Up

Mon 01 Barenaked Ladies & The Persuasions perform  
 
Tue 02 Veep actress Anna Chlumsky
Thu 04 Tommy Smythe tours architectural historic preservation projects
SEE THE FULL SCHEDULE

Mortgage Renewal Secrets


There are times that breaking a mortgage and paying the fee makes sense and many mortgage holders just roll the fee into the next mortgage.  But you always would want to crunch the numbers and see if putting the equivalent of paying the penalty down on the mortgage principal is a better option.

Paying off your mortgage can be a great forced savings approach.  Some individuals find they simply can’t save each month or year even if they’re forced (unless it comes right off the top from their employer).  Or, that they’ll be too tempted to spend what they’ve saved.  By committing to paying more than what’s required of you on your mortgage, you’re guaranteed that rate of return (the mortgage rate which is always higher than what a GIC at a bank would pay).  Plus, most mortgage holders never miss a mortgage payment, yet, when paying themselves first, they simply don’t.  Just keep in mind that fast track paying of your mortgage works best when you have a solid emergency savings plan as you can’t simply dip back into your mortgage if you have a short term need arise.

When people first take out their mortgage they’re often so thrilled that they’ve been approved, that they don’t really hear and take in all of the mortgage details.  It’s a good idea to give your bank a call once a year and check in on where interest rates are and what options exists for paying down your mortgage quicker.  You can also head online.  All of the major banks have excellent software on their websites that allow you to clearly see how many years those extra payments can shave off and the significant amount of interest.  And, if you’re not inclined and would like some help, pick up the phone and your mortgage department of your bank would be happy to calculate your options for you!

Tips for paying off your mortgage sooner:

  • Every dollar counts; if you have even $50 left over at the end of the month, call up your bank and apply it to your mortgage principal.
  • When you make extra payments, it’s applied directly to your mortgage principal.  That means you’re winning against the battle of compound interest (great when you’re investing but now when you have a long-term mortgage).  By just making your monthly payments, you’ll see each year from your annual mortgage statements that you hardly chiselled away at your original mortgage amount.  Lump sum payments go directly towards the principal.
  • Try to pay just a little more each month.  Once it’s a comfortable habit, increase it again by baby steps.
  • Remember to negotiate – the rate is always flexible and you can ask for a better one.
  • Shop around before you lock in – and bring your credit report with you.

Before you’re ready to buy or before your renewal, ensure you document and create reminders 120 days in advance and call your bank for a rate hold.

Monday, June 11, 2012

Coming Up

Mon 01 Barenaked Ladies & The Persuasions perform  
 
Tue 02 Veep actress Anna Chlumsky
Thu 04 Tommy Smythe tours architectural historic preservation projects
SEE THE FULL SCHEDULE
http://www.marilyn.ca/Tickets/FAQ