At Avi Urban, we work with the experts to help you make the best decisions when buying your new townhome or apartment with us. One of these experts is Laura Parsons, Bank of Montreal Manger of Mortgage Specialists and Calgary Sun Columnist.
A recent survey revealed half of Canadian homeowners expect to carry a mortgage into retirement and more than half believe their retirement will be impacted by their debt load and mortgage.
So how do you begin the plan to becoming debt free? Your mortgage is a great place to start.
One of the first ways to become debt free faster is to shorten your amortization on your mortgage. Just going from a 30 year amortization down to 25 years can save you thousands in interest. Review your mortgage documents and ask your banker to run some numbers. They can show you the difference an extra $20 a month can make.
It’s also important to know your options in your mortgage, such as the ability to prepay or increase the amount of your payments. You may not have been aware of these details, since buying a home is a blur for most clients (and so are some of the fine details). However, being able to pay a little extra towards your mortgage now will pay off in the future.
You can also arrange to change your mortgage payment frequency from monthly to biweekly, or biweekly to weekly. This could take years off your amortization. Don’t worry if expenditures come up and you can’t continue making weekly payments. You can easily convert back to monthly. By increasing the amount of your payments, you are also preparing yourself and your budget should interest rates rise – you’ll be used to higher payments.
There is a lot you can do to minimize debt and save for your retirement. Meet with your banker to help maximize your options and have a closer look at your mortgage.
Questions or comments for Laura? Drop her a line at firstname.lastname@example.org, or comment below.