July 21, 2014 -
CIBC says even small efforts can lead to big savings for homeowners in the long run.
For example, someone paying 4.99 per cent interest on a $250,000 mortgage with 25-year amortization can expect to save nearly $35,000 of interest if they add $147 to their $1,453 monthly payments.
The same homeowner can save as much as $30,000 on interest if they make $726 payments every two weeks, instead of waiting until the end of the month to make a payment.
The bank pointed out that even making a lump sum payment every year -- for instance, putting the average $1,600 tax refund towards the mortgage -- would shave off $33,103 of interest.
"Employing one or more of these strategies does take some planning and discipline," said Barry Gollom, vice-president of secured lending and product policy at CIBC.
"If becoming mortgage-free sooner is something you want to achieve, it's important to look at your mortgage as part of your overall financial picture and to balance your mortgage payment plan against your other goals."