A lot of people talk about getting their mortgages paid down earlier so that they can be set for retirement. According to a new poll by Angus Reid that was conducted on behalf of CIBC, the average Canadian homeowner expects to be free of his mortgage responsibility by the age of 58. In a poll that was conducted last year, the average age was 59.
Although this is the average age, the survey showed wide discrepancies from one part of the country to the other. Here in Alberta, for example, homeowners expected to be free of their mortgages completely by the age of 55 while in British Columbia, the average homeowner believed that his mortgage wouldn't be paid off until he was 66.
In Saskatchewan and Manitoba, the average age that a homeowner expected to pay off his mortgage was 58 years, in Québec it was 56 years while in Ontario and Atlantic Canada it was 57 years.
On a national level, half of the survey respondents said that they were able to pay down their home loans faster due to the low rates of interest. As well, 55% were making an effort to pay off their mortgages earlier. Last year, 68% were making the effort to pay down their home loans sooner.
According to CIBC, making the effort to pay down a mortgage faster can lead to extreme savings over the course of the home loan. By simply paying more every month or by adding on extra payments when possible, thousands of dollars of interest can be saved. For example, if you have a home with a $250,000, 25 year mortgage with a 4.99% interest rate, you could save more than $30,000 worth of interest by making a $1,600 lump sum payment each year.
It's interesting to look at the amount you could be saving by working with mortgage calculators. You can also figure out when you could possibly upgrade to a new home based on your income, the mortgage you currently hold and any extra money that you can possibly add to the payments.