Five Ways To Save Money On Your Mortgage

Five Ways To Save Money On Your Mortgage and How To Use Your RRSP To Buy Your A Home

HOW TO USE R.R.S.P’s (5)

• Up to $25,000 per person can be withdrawn tax free from RRSPs to buy or build a principal residence.
• Couples — including common—law, will be able to draw up to $50,000 in total
• Homebuyers must repay their RRSPs within 15 years in annual installments.
• You may make overpayments to reduce payments in subsequent years.
• If the homebuyer fails to make one annual repayment, the amount will be considered as income on that year’s tax return.
• All types of housing are eligible including townhouses, condos, Co-ops, but they must be located in Canada.

This is meant as a guideline. For further information consult your bank/trust Company/investment broker or Revenue Canada at 1-8…

5 WAYS TO SAVE MONEY ON YOUR MORTGAGE (6)

Once you settle into your new home, you’ll quickly see bow well you are managing your cash flow. Then you can start looking for ways to pay down your mortgage while living within your budget. The good news is that there are several ways you can save money. Here’s how to do it. 1. Shorten Your Amortization You save the most money if you’re on a shorter amortization right from the beginning, but you might want to start off with a 25-year amortization for the lowest possible payment. As your finances secure, you can take a shorter amortization when you renew your mortgage.

If you don’t want to wait until renewal, you can simply increase your monthly payments, which has the same effect as taking out a shorter amortization. In fact, once each calendar year, on any regular payment dates, you can increase your payments up to 10000 of your original monthly payment.

For example a starting monthly payment of $500, can be increased to a monthly payment tip to $1000 for the duration of your term. Should you decide that these increased payments are straining your budget, you can decrease these payments back to the original amount- at no charge.

2. Change Your Repayment Plan This option is as convenient as it is economical. You can make payments on a weekly, bi-weekly or semi-monthly basis, so you can even pay on payday. Combine this with a shorter amortization period and you’re on the fast track to paying off your mortgage.

3. Pay Down your Principal Faster You can pay down your principal balance more quickly than the weekly payment plan. Pay tip to 10% to 20% of your original loan amount once each calendar year, on any regular payment date, without charge. For example, if you have an $80,000 mortgage, you can pay up to $8,000.

Notice that you’re not tied to an anniversary date. This means that you can pay down your mortgage at the earliest possible time; as you know, the earlier you pay it down, the more you save on interest.

If you pay down 10% in the last week of December and another in the first week of January, you effectively have made a 20% decrease in your mortgage. (those savings can start accumulating right from the beginning of the year!)

4. Pay Down Any Amount On Any Regular Payment Date
With a One-Year Open Mortgage you can make pre-payments of any amount on any regular payment date, without charge or additional administration costs. Should interest rates come down during the year and you want a longer term, you can renegotiate your mortgage at any time for a nominal renewal fee.

5. Double Up Option Several institutions offer a double your regular payment option. The extra payment is credited directly toward principal. This allows you to pay down your loan quickly without obligating you to the higher monthly payment.

You can find our Mortgage Calculators at Mortgage Calculators Or get started with a Mortgage Application at Mortgage Application.