• At Robert Floris’ Hamilton office we talk to many people on a daily basis regarding a variety of mortgage subjects. These areas can include refinancing for debt re-structuring, bad credit, no equity or simply lifestyles with a mortgage. Today, we will touch upon paying your mortgage faster while building it in your lifestyle. What it requires is a plan.

    Many Canadians visit financial planners and rightfully so. A good planner takes his time to develop a comprehensive system to build your wealth over many years. Well a good mortgage broker will do the same thing but in reverse. He/she will have a course of action that will outline what their particular scenario would be for each family.

    The most important area is the couple themselves. The couple must be selfish and consider their needs first. Basically, if the couple is not on the same page then goals will be clashing and stress will begin. A couple should think the following according to their lives:

    • How many years do we want to pay the home?
    • What do we want in life? Eg. To travel, or to go out all the time.
    • How much do we want to allocate towards housing?

    Secondly, the couple must pay themselves. When you pay yourself, you are ready for any emergencies that life may throw your way. This is a must. When you put away 10% of cash, you have choices. You will be prepared for the car repair, or the new furnace or your child’s braces. Unfortunately, many Canadians get an unsuspecting bill, which forces them to turn to their Visa for payments. Steadily, as the sun rises every morning, the Visa bill grows.

    What’s wrong with putting away a $100 to $150 per paycheck? It is amazing how quickly your cash will accumulate and you will be ready for the rainy day.

    Now we reach our final area of planning. The mortgage itself. Clients are startled when we place this as our third choice. Let’s take a look at a typical mortgage of $250, 000 over five years at 2.79% and amortized over 25 years. Remember, although rates are important, amortization is way more vital in terms of saving money. In our example, simply going bi-weekly accelerated would knock off 2 years and 9 months over a 25 year period, but you would also save close to $12, 000 in interest. Now let’s suppose you increase your payments by $60 per month or 30 bi-weekly payments at the end of the year. Well, you just took off another year and nine months off of your mortgage. How much saving is that? Based on this mortgage, you would have saved over $26, 000 in payments. If possible, the year after, try increasing the payments by another $30 bi-weekly. It would reduce the mortgage by another year and a half. The point is that you do not have to do too much in order to affect your mortgage. However, you do have to work the plan. Less than 10% of Canadians use this trick, but using it is easy and results in you having a great life. In conclusion, here is the master plan.

    • Be selfish and think about what you want most in your life.
    • Pay yourself first.
    • Small incremental increases in your mortgage annually pays huge mortgage savings.


    GO MAKE YOUR PLAN!!!!!!!

    Robert Floris is an independent mortgage broker at Mortgage Architects in Hamilton, Ontario.

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