Be Mortgage-Free Sooner

Most Canadians on average who currently have a mortgage plan to have it paid off by age 55.  However, according to a CIBC poll conducted by Harris-Decima; many Canadians are mortgage free by age 48.

What’s their secret?   The poll uncovered a few extra steps and decisions made by respondents to pay down their mortgages’ faster.  The majority of the mortgage-free people asked; used one or more of the following strategies to help accelerate their payments:

    ·        52% made lump sum payments annually
    ·        42% increased the amount of their payments
    ·        40% increased the frequency of their payments

To help implement these strategies; the majority of the mortgage free Canadians (78%) said they made a number of sacrifices along the way, including;

    

·        Creating a budget to keep track of spending

     ·        Skipped large and/or ‘unnecessary’ purchases
     ·        REliminate extra spending; like restaurant and entertainment
     ·        Skipped vacations

CIBC suggested a few strategies to help minimize the feeling of sacrifice while people worked towards becoming mortgage free.  Tax refunds, for example could be used as a lump sum payment toward your mortgage; or you can increase your payment slightly at the beginning of each New Year.  Also, increasing your payments when you get a raise at work can help your acceleration without a significant impact on your cash flow.

“Being mortgage-free” is a top financial priority for many Canadians”  says Colette Delancy of CIBC, “Consider what you normally pay to your mortgage every month, and then imagine that dollar amount going towards your retirement savings instead.  That really puts into perspective the difference paying off your mortgage even one or two years earlier can make” she adds.

“Your mortgage is one of the biggest financial commitments you will ever make, and investing time to get advice about how your mortgage fits with your overall financial goals can yield significant financial benefits down the road,” says Delaney.  “Follow easy strategies and capitalizing on today’s low rates will help people accelerate mortgage repayment.”

To learn more; or to find out how you can pay down your mortgages faster, give me a call.

Have a great weekend,

Tracey

Source:  Advisor.ca