The single largest purchase a Canadian will ever make during their lifetime is buying a mortgage for their home. Considering that fact, is there a way you can finance your homeowner's loan, include all your debts and decrease your payments, while paying your bank debt off in half the time? There is a way to do this and it is available, not only in Canada and in the US, but first we have to face the real problem.
Truth is that when you borrow for this liability on your home, whether you are a new homeowner or have had your home for a few years, you are borrowing the interest as well as the principle and are owed to pay the full amount. Going the traditional route, you are always paying the borrowing rate on the original amount of the bottom line you borrowed, regardless of how little you may owe to the bank. This makes your mortgage just an installment loan, the same as a car or personal loan and it is front-end loaded by the bank so you overpay by at least $ 200,000 during your lifetime.
Then there is the compound interest trap! Here's how the numbers add up. Regardless of your lending rate, you will pay for approximately 14 years before your payments will ever reach the 50% to principle and 50% to interest level. Example: a $ 250,000 mortgage rates a 6% rate amortized over 25 years and your monthly payments will be approximately $ 1600.00 on your first payment. The bank will get $ 1,218.00 of that and you will pay only $ 382.00 on your principle owed. In your 180th payment, your 15th year, you are finally ahead of the bank by $ 867.70 to your homeowner's contract and $ 731.82 to the bank. Also by the 15th year, you will have paid a whopping $ 182,500.00 in accrued profit to the bank; interest and principle combined, you have paid $ 288.000.00 and you still owe $ 144,520.10.
After years of indebtedness, you have been helping the moneylenders, sometimes the banks; get richer at your expense! Since time is more your enemy than the interest rate is, Canadians are scrimping and scratching and trying to double up or increase their monthly obligations. They make lump-sum payments periodically against their outstanding burdens or bi-weekly payments, all in the hope of bringing their balance down faster. Unfortunately, all these traditional methods lead to the same output – an increase in your out-of-pocket expenditures. If you do the math, you quickly see how you can not afford to pay more each month?
I know of a program that homeowners can access that will help them become mortgage and debt free in the shortest possible time, using less money to achieve more results and saving you thousands of dollars in your mortgage payments; thereby adding years to your savings with no increase to your present total debt payments. Interested? Part two is coming.