Saturday, 19 March 2016

Mortgage Chat

We decided with this new mortgage to change things up a bit.

When we first bought our house 3.5 years ago, we went with a 25 year mortgage. It was a manageable payment, that's all we really cared about at the time. I remember the first anniversary of our mortgage we got an information sheet from our bank explaining how much we paid, the interest rate, etc etc. Pretty neat overview of our largest debt - until I got to the principle and interest breakdown from our payments. How depressing to see more money going to interest than principle. But alas, we had much bigger and more expensive fish to fry.

Now we are in a position where the mortgage is our only debt. If we kept things the same and ported our mortgage, we would have been on track to pay it off in 21.5 years (that half is important to me for some reason). But what fun is that? So instead we opted to pay the fee to break our current mortgage and secure a much better interest rate plus change the amortization to 20 years. The biggest difference, however, was when we changed our payment frequencies. Right now we pay monthly, we could have changed this any time but never really thought about it. With the new mortgage we changed our payments to accelerated bi-weekly. Doing that alone shaved off an entire two years of payments! So now we are set to be mortgage free in 18 years - or when I'm 43. How sick is that? And that's not if we pay any extra - which our mortgage allows without any penalties.

I'm really proud since not only did we get rid of 3.5 years off our mortgage by just changing a few things, but we also did this all while doubling the amount of our mortgage. Not that the mortgage amount is something to be proud of but it's a huge motivator to get it paid off even sooner!

We are also taking this opportunity to change our insurances (both auto and house) around a bit, but once I get the final numbers I'll share with you what we saved. :)

10 days until the move!

- M


  1. Why did you have to pay to break the mortgage when you're selling the house? Does the mortgage follow you to whichever house you own? Canadian mortgages are way different than ours.

    1. We were in a five year term and since the term wasn't up we needed to break the mortgage (just three months of interest) to do what we did. We could have ported the mortgage to our new house (which would be like what you are describing) but we would have kept our higher interest rate. We decided paying the three months of interest was a better option since we locked in a much lower interest rate for 5 more years. I hope what I said makes sense, but don't worry because I still don't understand what escrow means while reading US blogs lol

  2. It is incredible how just paying a bit more frequently, or a little extra down, can sure affect that darn interest owing. Good for you for planning ahead.

  3. I know! It really opened our eyes to the difference little changes can make

  4. Huzzah! Those are some fantastic changes. It must feel so good!