At Capital Mortgages in Ottawa we strive to be your personal mortgage broker for life.

You know all those neat features on your mortgage that will allow you to get that sucker paid off lickety-split? How many of them have you taken advantage of?

If you’re like most Canadians, not many. According to Canada Mortgage and Housing Corporation (CMCH), “27% of recent homebuyers have either made a lump sum payment or increased their regular payment.” That leaves 73% of y’all doing nothing to speed up your mortgage payoff!

The easiest of the pay-it-off-faster options is the accelerated payment plan. Instead of making the equivalent of 12 monthly payments, you make 13 with the extra payment going directly to your principal. It cost just a few dollars extra a week, but the impact over the life of your mortgage can be huge. On a $300,000 mortgage at 6.5% over 25 years you’d save over $60,000 in interest just by choosing this option.

The option that sees the least action is the lump-sum anniversary prepayment. Most mortgages allow you to make an extra payment each year, which goes directly to the principal. But folks just never seem able to come up with the money. Hey, why don’t you make an RRSP contribution this year and then take your tax refund and use that to make an extra payment against your mortgage?

As for all that smart shopping you’ve been doing, it’s time to make it really pay. The next time you “save” money on anything you buy (you are such a smart consumer!) put the money you saved in a jar. When you get to $25, deposit it to a high-interest savings account. Then, when you’re closing in on your mortgage anniversary, make a prepayment.

You can do the same thing if you get a raise; just move a little of your extra money to your mortgage prepayment savings and do some real good with your raise. Make a principal prepayment of $3,000 on that $300,000 mortgage just once and you’ll save over $11,500 in interest. Do it for five years and you’ll save $45,000. Do it for 10 years and you’ll save almost $69,000.

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