Top Money Saving Tips for Canadian Mortgage HoldersDecember 12, 2012
Paying off a mortgage is the number one priority for many Canadian homeowners. There are many ways to take advantage of your mortgage and these money savings tips from ComparaSave.com will help you save more money.
A mortgage is one of the biggest debts that Canadians will assume in their lives. Homeowners are comfortable with their house debt and at least one-third are taking advantage of the lower interest rates in the market to accelerate payments, according to a recent survey by CAAMP. Now’s the time to take advantage of your mortgage and add more money in your pocket with these savings tips.
Do your Homework
Whether you are a current mortgage holder or looking to obtain one, find out more about the products you have. There is more to it than just knowing what your monthly payment will be and what interest rate you will hold. Find out the terms and conditions of all the products offered – this will provide flexibility throughout the term of your mortgage. And before looking for a mortgage, you should learn the basic mortgage terms.
Don’t take on more than you can afford
Some banks may qualify you for more than what you are looking for. This may seem great, find a bigger home, but remember that this may come at the compromise of your lifestyle. Canadians are taking on too much debt. This is due in part by historically low interest rates. They are bound to go up at some point. Be sure to plan for rate increases when calculating how much you can afford.
It is encouraged to shop around for mortgage rates, whether physically at different financial institutions, or online through rate comparison sites like ComparaSave.com. This will give you more power to negotiate better rates. A few basis points make a BIG difference when it comes to paying off your mortgage. Your current bank will try to renew your mortgage automatically. Be proactive not reactive – shop around.
Assess Your Risk
One of the biggest decisions in terms of rates is deciding on a fixed rate or variable rate mortgage. Variable rates can fluctuate, making your payments increase or decrease without notice. While you may be saving money initially, be sure you are prepared should rates go up.
Mortgages are Marketed
Some banks will offer lower rates if you switch your everyday banking account over to them. The difference in interest is sometimes recovered through administration fees for these chequing or savings accounts, or the mortgage terms may have less flexibility.
Increase your Payment Frequency
Any additional payments you can make on your mortgage will save you lots of money in the long run. Changing your payment from monthly to bi-weekly alone eliminates a couple of years from your amortization period.
Prepayment priviledges are your chance to bring down that principal balance. Take advantage of this annual amount any chance you can. More of your money will be applied to your principal and less to interest.
Being informed and aware of the details of your mortgage product is the best way to save money when entering one of the biggest financial transactions of your life. These are a few tips to help Canadians put more money in their pockets!