Accelerating Mortgage Payments will Free up Cash for RESP, Retirement Savings

mortgage savingsA couple we’ll call Harry, 35, and Tina, 37, are thriving in their careers. Harry, a geologist with a large company, brings home $5,730 a month. Tina, a management consultant in the chemical industry, adds $3,880, for total monthly disposable income of $9,610 a month. They have a two-year-old child.

You could say that Harry and Tina are typical Canadians. Their income, though above average, is just enough to get by in their home in the Greater Toronto Area, one of Canada’s most expensive places to live.  Read More…

This article has 10 Comments

  1. Camren

    Yes paying one's mortgage off quickly is the best way to go. Makes perfect sense. When we bought our first house we were very ignorant and only put down the minimum amount which was a mistake since we had more to put down (which would have reduced our interest owed).

    We felt keeping more outside the mortgage would keep us from going in the red due to unexpected events. It was being way too cautious.

  2. Antwon Nossaman

    Actually @joe, it's every Canadian's dream to own their own home. Something magical about it and knowing you have your own kingdom. That is why.

  3. Edgar Sergant

    No offense but if this is a real couple then they spend way too much each month — property repair each month is $650?

  4. Tariq Butler

    It talks about accelerated pay down to help reduce interest rates over the years. This is bank specific and usualy might only occur during special occassions ever # of years. Most banks prefer you not pay it quickly (assuming you are a good payer) since they make most of their profits from lending loans like mortgages.

  5. Jeromy V.

    What about HELOC? I don't know the full details but i would think making use of that would help too.

  6. Joe Sillion

    It's truly fascinating to think that people still yearn to have a mortgage at all costs to the detriment of other, more important, things such as Retirement savings.

  7. Aidan Whale

    Yea but this all assumes they both will be a couple for the rest of their lives which statistically that is very, very unlikely.

  8. Dont U

    I really enjoyed the articles break-down of different scenarios. One of which fits where me and my spouse are right now. Much appreciated for this share.

  9. Abdul Comstock

    They are in better shape than us. We are currently underwater in terms of finance and looking for relief through CRA 🙁

  10. Bob B.

    The glaring mistake by Harry and Tina is that they never take full advantage of their TFSA.

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