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Monday, October 2nd, 2023

How to Save a Lot of Money on your Vancouver Mortgage – From your Friendly Vancouver Mortgage Broker

How to Save a Lot of Money on your Vancouver Mortgage – From your Friendly Vancouver Mortgage Broker

It’s hard to believe but it was only a mere 5 years ago when the rates for a Vancouver home mortgage were double what homeowners are paying at today’s rate.  If you were to calculate the difference for a 25 year based mortgage, and you had to pay the same rate today as you did 5 years previously, your mortgage payments would cost you around 36% more than what you’re currently paying.

Let’s look at that in what that would mean in dollars so you can appreciate the significance of the difference. In 2007, if you owed a $200,000 mortgage which you took out for 25 years at double the interest rates of today, you would be paying $1,284 per month.

For the same mortgage today, you would be paying $945 per month. The annual difference is $4068, and works out to a whopping $101,700 in savings over the 25 life span of the mortgage. This is how much money you’d be putting into your pocket if you could afford to pay the 2007 monthly mortgage payments at today’s interest rates.

The question is whether or not you’re taking advantage of today’s interest rates? If you can afford to pay more on your mortgage now, then this is a financial strategy thisVancouvermortgage broker is saying can be well worth your while over the long haul for a variety of reasons.

The CAAMP (Canadian Association of Accredited Mortgage Professionals) says that nearly 60% of Canadians are not taking advantage of the low rates and are only making their minimal required payments.

Let’s look at the savings from another angle. If you were to pay more than your monthly minimal, that’s also going to knock down the principal, so how much would the principal be reduced in 5 years? At today’s rates, if you were paying the 2007 monthly payment of $1,284 you would reduce your principal by an additional $21,900 in a 5 year period.

By paying this monthly amount, you would also save yourself another $1,600 in interest. You would have your mortgage paid in full in approximately 16 ½ years. Not bad eh?

It gets even better should you take this approach. If you chose to pay bi-weekly instead of monthly, this means you would be paying $642 every 2 weeks. The amount of interest you would save over 5 years would work out to around $2100. Even better, your mortgage would be paid in full in 14.8 years which is almost 2 years quicker than if you paid the same amount monthly.

It appears that mostVancouverhome owners may be focusing a bit too much on interest rates. You may not be taking full advantage of today’s low rates if you also don’t try to save on your amortization, because this can really save you a lot of money if you can afford to pay more on your monthly mortgage payments.

I understand that many people who have mortgages may not be able to pay more for a variety of reasons. But, one key principal you should understand is that if you can afford to pay more, than for every dollar you pay above and beyond your current monthly payment, that is interest you won’t be paying on that dollar for 25 years. This is savings that goes into your wallet.

Today’s rates are just about as low as you can get, and it’s unlikely they will get lower. The only other direction interest rates are going to be heading is upwards. When that is going to happen ,and by how much, you would need a crystal ball, so take it from this Vancouver mortgage broker – if you want to save some big money on mortgage, and if you can afford to do so, pay more on your monthly mortgage because it’s well worth it do so.



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