Monday, 10 September 2012

Which Mortgage to pay off first?

When you have more then one Mortgage the question is which one to pay down first? For me it's simple. We have a condo that we rent out where the rent pretty much covers our mortgage and strata fees in full minus about $100 a month. We also have a house where we currently reside. Because our mortgage is being paid for on our condo we don't really have to worry about it since our renters are paying it. So what if you have to pay interest on the mortgage? You don't have to pay out of pocket for it. Your renters pay it.

As for our house, we pay the mortgage, and we also pay the interest, therefore if we pay our mortgage down sooner the less interest we have to pay on it. In full, saves us money in the long run. I like saving $$$. Who doesn't in all honesty?

And so, I believe it is better to pay down whichever property you currently reside in. Saves you money in the long run. Our house also has a bigger Mortgage on it as well and so the interest costs would be greater. Paying it down sooner would in fact save even more money. I can't stress enough how important it is to pay down your mortgage sooner. Even if it's only an extra $50 or $100 a month. Those extra payments go directly onto the principle which brings your mortgage, interest and number of years down quicker.

I'm not rich by any means. I'm also not poor. I can afford to put down an extra $115 down on my Mortgage every month which I have budgeted into our monthly budget. It's not much but it saves me $40,000 in interest and pays off my mortgage 4 years sooner. So now my 30 year mortgage turns into a 26 year mortgage. The more I put on it the sooner my Mortgage will be paid off.

If I can save someone thousands of dollars in interest costs alone I will be happy. If I can keep your money where it belongs in your pocket, mission accomplished. I hate seeing people waste their hard earned money. I see too many of my friends and family members in debt and for what? I big screen TV, or a new kitchen that they just HAD to update? Why go into debt for material items? They just need to learn to be better with their money. Everyone would be that much richer if they didn't have debt repayment they had to budget into their monthly budget. If you didn't have that car loan of $200 a month or that credit card debt charging you 21% in interest you would be so much better off! Those things are not necessary to survive and certainly not necessary to live a nice life. They are extras, mire luxuries which if you can't afford, shouldn't have.

If I can get through to at least one person I will be happy and my job here is done.

I hope you enjoyed my rant today.