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Canadian Realestate Magazine | 23 Feb 2015, 06:54 AM Agree 0
Paying down your mortgage may be poor economics… Canadian cities fail to make sustainable top 10… Canadians weigh up big profits on snowbird homes…
  • Terry | 23 Feb 2015, 09:45 AM Agree 0
    As for paying down your mortgage , I think it's a wise decision because you would like to get it down as fast as possible before you renew at a much higher interest rate...Just imagine in 5 years from now and lets just say it increases by 2%, then you have to renew. A lot of people buying at such a low rate will not qualify. By paying it down you will have a lot more principle payed off , making it easier to handle , besides your already used to paying more on your payments.
    I believe this is just the Government trying to get us to buy more RRSP'S and Bonds!

  • NicD | 23 Feb 2015, 11:43 AM Agree 0
    Paying down debt, starting with debt with the highest rate of interest first, is always a good idea. However, if mortgage debt is the only debt you have, then what the article is suggesting, is that if you are able to invest at perhaps a 5% net rate of return, with a mortgage rate of 2.75%, then keep paying your mortgage at its current level and invest any extra money at the higher rate of return. That way, if interest rates are higher when you need to renew your mortgage, you will be able to use the investment funds to make a lump sum payment towards your mortgage. Just remember to take into account the fact you will likely need to pay income tax on investment growth, unless it is obtained in a tax exempt vehicle such as a TFSA.
  • Ken Koss | 23 Feb 2015, 12:34 PM Agree 0
    This article is written by a banker for a banker. Using a rate of return of 6% over 30 years and keeping mortgage rates at 3% over 30 years while dealing with a person in the 30% bracket over the same period of time works in your examples. Try dealing with reality or did they not teach you that in school?
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