ING Direct’s VP of Lending Martin Beaudry says it’s a smart
idea to increase mortgage payments through planned budgeting and saving. This
way, you become mortgage free sooner and save a large chunk on interest. He
suggests simple solutions to save money such as packing lunch to office,
ironing your own shirts and sacrificing a couple of lattés each week.If you switch from a monthly mortgage payment schedule to
one every two weeks and add a small extra amount to every payment, then you
will pay off your mortgage sooner and save thousands of dollars in interest. He
points out that the interest paid on a mortgage with a 25-year term can easily equal
the value of a new condo, if the rate of interest is high. It is also a good
idea to make larger payments in the beginning so that the principal amount on
which interest accrues can be lowered quickly.
The Mortgage Group’s Romana Bozic also says that adding a
meager $25 to your monthly payments may need only a small sacrifice but it will
make a significant difference to how much you eventually end up paying on your
mortgage. She suggests increasing RRSP contributions to bring down taxable
income and benefit from a tax refund. This saving can be diverted to make extra
mortgage payments. These guidelines should also be followed in other long term
debts, like a home
equity line of credit or a second mortgage.
