First, I’m going to rant about debt. Second, I’m going to share some easy but wicked mortgage payoff tips. Here we go.
Canadians have an excessive amount of debt.
How much?
$2.16 Trillion…with a T. That’s the highest level in the Group of Seven (G7) economies according to Chris Fournier of Bloomberg News.
Oddly enough, the current Canadian Federal election has mostly been about making it easier for people to own homes that they can’t afford. All made possible with taxpayer funded down payments. That’s the Red Corporation’s (Lib) plan. Next the Blue Corporation (Cons) will announce the end of the stress test and a return to 30-year amortizations. Highest G7 debt, Bank of Canada says our biggest economic vulnerability is our household debt. Cue politicians to make a big problem worse.
So why do Canadians have such an excessive level of debt?
The debt wheel tends to start turning as soon as we decide to pursue “higher education”, taking out student loans and usually our first credit card. Those education loans add up and get us accustomed to the treacherous idea of monthly payments as a normal thing in adult like.
First off, you shouldn’t go anywhere near a post-secondary education facility until you have a damn clear idea of what you want to study. Gone are the days of needing to go a university or college in order to “find out what you like”. You can instead enrol in a few iTunes University or online courses to test the waters, courses taught by some of the continent’s top professors, for $60/course – instead of thousands.
Experiment away, go travel, learn to manage your money on a small scale, work, experience, learn a language. Once you have a clear, mature picture of your most passionate interests, get the credentials you need for your chosen career and move forward with your life.
Having chosen carefully, your post-secondary experience will be more enjoyable and less stressful. Too many people I know started in one subject direction only to “switch majors” after a few years to pursue another course of study. Wasted time, wasted money.
Now, if you want to go have fun and spend $20,000 sleeping in, be my guest. But, beware the debt that will haunt you afterwards.
What happens next if you’re caught in the debt cycle?
Well usually new expenses arise. Cars, children, pets and toys (not the ones for your children, I mean the ones Canadians buy to impress the neighbours).
Then, the mortgage. This word comes from old French and literally translates into “death pledge”.
Yes, I am a mortgage broker and yes, I earn my money from arranging mortgages for people. However, I’m not going to blow sunshine at you. This is serious business.
Most of us need a mortgage. Not many have a half million lying idle in their bank account or rich relatives willing to cough up for the new home. So, we take a mortgage from a lender to finance the purchase of a property. Often, we struggle to pay that mortgage off quickly using the mortgage pre-payment privileges included in our mortgage contract.
Why?
Other debt obligations pile up? Sure.
Emergencies get in the way? Sometimes.
Our level of consumption is too high and is subsidized by open debt facilities like lines of credit or credit cards.
Almost always.
New this. New that. Pints, dinners out, expensive toys, brand new jacket, closet full of clothes, stylish furniture. Most people have so much crap that they use their garage to store this stuff and the car gets parked in the driveway. After the garage is full, they help prop up North America’s great storage industry by renting space for the stuff they can’t bare to part with but soon forget.
It’s pathetic.
If you want to get yourself and your finances under control then the following information will excite you. Learn how to pay down your mortgage fast and see approximately how much money you will save. It just takes a bit of planning and discipline.
Examples always seem to work better…
How to pay off your mortgage AT LEAST 5 years sooner while saving AT LEAST $20,000 in interest costs
Let’s use an average Canadian mortgage of $250,000 to illustrate savings. In many parts of Canada average mortgages are much higher.
Mortgage – $250,000, Rate – 2.69%, 25 Year Amortization, Payment $1,143.71
Increase your Monthly Payment
• Increasing your payment by 20% saves you $22,002.78 of interest cost, paying off your mortgage 5 years sooner.
Increase your Payment Frequency
• Using an accelerated bi-weekly payment frequency saves you $10,940.67 of interest cost, paying off your mortgage 2.93 years sooner.
Utilize your Lump Sum Payment Privilege
• Lending institutions typically allow clients to put down annual lump sum payments of up to 20% of the original mortgage amount. If you have the money to put down an annual 20% lump sum payment, your mortgage will be paid off approximately 20 years sooner.
• If you don’t have the full 20%, you can put down any amount over $1,000, directly against the principal.
• Lump sum payments of 2% of original mortgage amount or approximately $4,000/year in this case would save you $28,403.84 of interest cost, paying off your mortgage almost 7 years sooner.
Used individually or together, these pre-payment privilege options will help you get your mortgage paid off much sooner.
Your financial freedom starts by understanding the things that are not taught to you in school. These things are left off the curriculum on purpose.
Rant over.
Learn more frosted tips and dark web strategies in my Ebook, click HERE
Sincerely,
Michael
