We’ve all heard how beneficial it is to pay down your mortgage as quickly as possible (mostly from our parents), which is mainly to reduce the total interest costs you would pay until this debt is paid in full. I won’t bore you with all sorts of examples with how much you would save with a 20 or 25 year amortization versus a 30 year amortization, or by choosing weekly payments instead of monthly payments. There is no doubt that you would be definitely saving some interest costs whenever you put any extra dollars on your mortgage that is in addition to your normal regular payment you have set up with your mortgage lender.
However, I would caution you making this your number one priority over any other financial strategy of building your personal net worth over the road to your retirement years. You may first wish to consult with a financial expert regarding the pros and cons of sticking solely with your plan of paying off your mortgage faster with all your available financial resources, versus a more systematic approach to your financial well-being that also includes investing regularly in RRSP’s, RESP’s, and contributing to Tax Free Savings Accounts (TFSA’s).
First off, an RRSP contribution will provide a tax break far exceeding any interest savings from paying down your mortgage in any given year, as long as you are making sufficient income that reduces the total taxes payable and that you have the RRSP contribution room to do so. Contributing to a TFSA will also provide for tax-free income in your retirement years that may be very beneficial to you.
You need expert advise from trusted, knowledgeable people that will not only listen to your financial goals in life, but will also provide you with the necessary framework to accomplish them. I firmly believe that every situation is unique out there. How quickly you should pay off your mortgage and how much you can afford to invest with on a regular basis is obviously different from everyone else. Perhaps the ability to do all three would be a great plan and strategy set up by your trusted financial expert (ie- investing in RRSP’s, TFSA’s, and paying off your mortgage faster too).
If this scenario interests you, or you would like more information on what financial plan would work best for you, we would be more than pleased to refer you to one of the financial experts over at the Canada Loyal Financial office located at 309 Banks Rd. in Kelowna. They take their client relationships to the next level, and are dedicated to keeping all their clients informed and educated with all the products and services available to them. I look forward to talking with you soon to discuss mortgage strategies that best fits your needs and introducing you to one of the many financial experts at Canada Loyal Financial for a complete financial review and plan. By the way, our advice is free and there is no obligation by you at all. You can reach me (Ed) at 250-808-9000 to discuss further.