Paying Off Your Mortgage Faster?

Paying off your mortgage faster may not always be a good thing.

For Canadians it’s all about balance: balancing your checkbook, balancing your work and personal life, and balancing your debts. Over the last year, the real estate market saw two dramatic changes: household debt climbed to a record high and 32% of homeowners increased their mortgage repayments.

Image by: 401(K) 2013

Somehow, these Canadians had found ways to pay off their mortgages faster. In fact, approximately 1.9 million mortgage-holders had made additional payments during the past year. The remaining 60% continued to make their minimum biweekly payments while contributing to their RRSP’s, utilities, groceries, vehicles and daycare costs.

While being mortgage-free is a homeowners dream, one must remember that it’s all about balance- although their mortgage debt is falling, their consumer debt is rising. Some of the 1.9 million mortgage-holders acquired debt elsewhere, such as: credit card balances and lines of credit. As a result, they are not getting ahead in their overall debt load, despite their faster mortgage repayments. It’s a dangerous game, especially when credit card debt comes with a very high interest rate.
The keys to obtaining mortgage freedom are balance, cash flow discipline, and a commitment not to spend additional income on items other than your mortgage repayment. Mortgage rates are at an all time low, so now is a perfect time for Canadians to take advantage of it and shorten their amortization periods- as long as they do it wisely.

Stephen Lau and the Edmonton Home Pros team can help Edmontonians become homeowners. Looking to buy a home? We can bring in mortgage specialists to talk financing options with you and answer any questions you may have. Contact Stephen Lau today!