One positive consequence of the tighter mortgage rules is shorter amortizations. While extending your mortgage over 40 years may make your payments more manageable and allow you to qualify for an even bigger home, you may never live to see your mortgage burning party.
In pricier markets, the rational has been that you will enjoy significant capital appreciation that can contribute to your retirement savings. Many are also under the belief that they will be in a better position to pay down their mortgage more aggressively 10 to 15 years from now. The reality is, Canadians don’t pay more than they have to and generally spend any extra cash flow on entertainment and luxuries. Those of us who take, or are forced to take, a shorter amortization get accustomed to our monthly budgets and live our lifestyle more in keeping with our income levels. Although this plan of attack doesn’t sound as much fun, the peace of mind of a free and clear home and the ability to live out our retirement years in style, is priceless.
Retirement is closer than many of us realize and it sneaks up on all of us. Our mortgage plan is a critical piece of our overall financial plans. Make sure you speak with a mortgage professional about your mortgage plan. Don’t let your retirement sneak up on you.