By Julie Cazzin | From MoneySense Magazine | September/October 2011
According to Jason Heath, a fee-for-service adviser with E.E.S. Financial Services in Markham, Ont., the Hollands will be able to meet their goal. In fact, if the family does indeed get a 4% annual wage increase, and they apply all of the extra money (after taxes) to their biweekly mortgage payments, they should have their mortgage paid off in less than eight years. That’s compared to more than 14 years if they continue their current payments.
Heath’s projection even assumes that the interest rate on their mortgage will rise. “I could see a 3.5% average rate over the next 10 to 15 years, so I’ve assumed this rate on their mortgage starting in a year’s time,” says Heath.
He warns that while the plan to put all future raises towards their mortgage is a good one in theory, it might not come to fruition exactly as they planned, because their basic expenses will rise over time along with their income. “They must be vigilant with their expenses to make this plan a success.” read full article