Most mortgages come with pre-payment previleges (e.g. upto 20% of the principal in any 12 month period). Since mortgage interest is not tax deductible in Canada, making a pre-payment is a very smart move, especially in the early years of a mortgage. When a pre-payment is made, it immediately reduces the principal balance on the mortgage. The interest portion of future payments also decreases. It is equivalent to getting a tax-free guaranteed return on your money.
Let us assume a $150,000, 5% mortgage, amortized over 25 years. Let us also assume that we pay an extra $150 every month. Over the life of the mortgage, we can save more than $30,000 and become mortgage-free 6 years earlier. A very useful mortgage payoff calculator can be found at Dinkytown.net.
Bookmark: del.icio.us Digg StumbleUpon
5 responses so far ↓
1 Steve Brown // Sep 21, 2007 at 12:29 am
If you want to turbo charge the pre-payment of your mortgage in Canada, you should check out United First Financial’s Money Merge Account (MMA). You can view it at http://www.yourhousepaidoff.com.
The average mortgage pay off time for the typical client is 8-12 years on a new 30 year mortgage or 1/2 to 1/3 the remaining period.
Regards,
Steve@yourhousepaidoff.com
Now in Canada
2 Real Estate » Comment on Pre-pay your Mortgage by Steve Brown // Sep 21, 2007 at 7:44 am
[...] JLP wrote an interesting post today onHere’s a quick excerptIf you want to turbo charge the pre-payment of your mortgage in Canada, you should check out United First Financial’s Money Merge Account (MMA). You can view it at http://www.yourhousepaidoff.com. The average mortgage pay off time for the … [...]
3 Real Estate » Comment on Pre-pay your Mortgage by Real Estate » Comment on Pre … // Sep 21, 2007 at 10:34 pm
[...] unknown wrote an interesting post today onHere’s a quick excerptJLP wrote an interesting post today onHere’sa quick excerptIf you want to turbo charge the pre-payment of your mortgage in Canada, you should check out United First Financial’s Money Merge Account (MMA). … [...]
4 Steve Brown // Sep 24, 2007 at 11:38 pm
Hi again,
It has been brought to my attention that United First Financial has not yet approved the Money Merge Account for Canada. “When & If” has not yet been decided. I will update this site as more information becomes available. Sorry for the errant message concerning this. For additional information on how the Money Merge Account works, please contact me directly.
Regards,
Steve Brown
steve@yourhousepaidoff.com
5 Mike Roullier // May 14, 2008 at 1:39 pm
It’s available now in 5 of the provinces.
Mike Roullier
mroullier@comcast.net
Leave a Comment