5 Money Saving Mortgage Moves

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If you have room in your RRSP or TFSA, over the long run, you will likely be beAer off puDng money there first (You do not need big returns to outpace your mortgage rate). Mortgage borrowing rates are at historical lows, and leveraging against this with a smart investment plan, can greatly increase your wealth posi.on long term.

If you look to an RRSP, it is an excellent tax shelter and your pending tax refund can be used for more inves.ng or to pay down the mortgage debt. Money grows faster than it reduces debt.

Goal #1: Build Greater Net Worth


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If you have any consumer debt (credit cards, line of credits, etc.) it is likely priced higher than your mortgage and compounded more frequently.

Do not do accelerated weekly, or bi-‐weekly payments to reduce your mortgage-‐rather, take the extra cash and pay off the consumer debt first.

Once these debts are paid, you can then turn your focus to the mortgage. In some cases, consolida.ng consumer debt into a lower rate mortgage will also make sense.

Goal #2: Free Up Cash Flow & Lower Monthly Obliga.ons


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This move will allow you to take full advantage of today’s low rates, while protec.ng yourself against the uncertainty of tomorrow. The extra amount will go directly to principal and likely save you thousands over the term of your mortgage.

In addi.on, you will not be hit with poten.al rate and payment shock when your mortgage renews.

Goal #3: Protect Yourself from Poten.al Rising Rates


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If you have decided you want to make prepayments on your mortgage, do it as o]en as you can.

Prepay when you have the cash -‐ you do not have to wait un.l the anniversary date (with a flexible mortgage product).

This will accelerate the pay down and save you interest costs.

Goal #4: Focus on the Mortgage – Pay it off Fast


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Do not use a line of credit to service long term debt. The bank sells you payment, but you just cover interest (at a higher rate than many other mortgage op.ons).

Home equity line of credits work great as investment tools, or to cover very short term expenses, but should not be used to service household debt, or finance your home. You will pay less interest in a more tradi.onal mortgage vehicle.

A line of credit can certainly be part of your mortgage plan-‐it just shouldn’t be your complete mortgage plan!

Goal #5: You Want Minimal Interest Costs


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5 Money Saving Mortgage Moves

Real Estate

Transcript of 5 Money Saving Mortgage Moves