Small Steps Towards Financial Freedom
You can baby step your way to mortgage freedom and save thousands of dollars in interest in the process.
According to Scotiabank’s Mortgage Landscape Study, almost two-thirds of mortgage holders agree they could pay off their mortgage faster without impacting their lifestyle. How much does it take — only an extra $20 a month.
While many homeowners think in terms of lump-sum payments, which are a great option, there are other ways to save money and pay down that debt. Seventy-nine per cent of mortgage holders have taken at least one of these steps:
1. Refinancing for a lower interest rate
2. Renegotiating for a lower interest rate
3. Switching to bi-weekly payments
4. Increasing amount of regular payments
5. Lump-sum payments
Increasing your payment by just $20 a month will have a positive impact because the extra money is applied directly against the mortgage principal. This decreases the amount of interest you will pay over the life of the loan. For example, the average borrower would save almost $2,800 in interest over 25 years and reduce the amortization by 10 months.
Imagine if you added $40 or $60 a month.
Interestingly, the poll also showed that 21% of mortgage holders have not taken any steps to pay down their mortgage for the following reasons:
1. Don’t have available funds
2. Have other payment priorities
3. Don’t know what steps to take
The poll also revealed that 51% of mortgagors have spoken to their mortgage professional about how they can become mortgage-free faster.
It’s easy to forget about your mortgage when you’re making automatic payments. It’s a good idea to keep up-to-date on mortgage options and interest rates .You could potentially save a ton of money by understanding those options.
The freedom that being completely debt-free brings is a dream for many Canadians. If you’re unsure of what your next step should be, just give me a call. Together we can review your mortgage, look at your financial picture and devise a mortgage-reduction plan that works for you.