Mortgage Update

After being backed up for a couple of weeks due to the sheer volume of applications National Bank has issued a commitment for our mortgage. We have sent in all of the documents and we are hoping that we will have the All In One Account in place by May 13th. When it is in place I will start tracking our finances a little differently. I will be tracking our mortgage debt, tax deductible debt for our rental expenses and net worth. Although I was focused on paying off our entire $316,000 mortgage in 5 years I may have been too focused and missing out on some other opportunities.

My spouse can buy back some of her pension. Retiring earlier is very inviting. I will continue to keep my RRSPs topped up and my spouse will contribute to a spousal RRSP as we prepare for me to move to 100% self employment in the future. We may even look at TFSAs. Unfortunately the prepayment privileges are a little restrictive compared to my original mortgage. A 10% lump some and up to double every payment will not allow me to fully pay off the mortgage by the end of the 3 year term. If we are ever in a position where we are having money idly sitting around we will discuss ways to use it. At the end of the term we will not have a fixed component to our All in One product and should be able to pay off the balance in a few months.

If you have ever Googled anything like, "pay off your mortgage sooner" or "save money on your mortgage" you have likely come across mortgage acceleration programs or money merge accounts. The premise of most of these systems is that you never have money idling sitting in a chequing or savings account. Your money is always offsetting interest on your debt. This is what we are going to do, but I will pass on any pricey software. This will work to our advantage because at any given time we have between $9,000 - $15,000 sitting in our bank accounts waiting to pay expenses. Our plan is to keep our line of credit with a balance of about $20,000 while the rate is under our mortgage portion interest rate. When prime goes up and our line of credit interest is higher than our mortgage interest we will keep our line of credit balance right around $0.

Switching to National Bank's All in One product will save us on interest costs and give us the flexibility with our debt and finances. I am looking forward to it.