Stop Paying your Mortgage Bi-Weekly

I sometimes feel alone on this topic. I have written many articles on this topic and spoken at seminars, yet rarely hear others talk about it. Banks and mortgage brokers offer you options on how you want to pay your mortgage, biweekly, accelerated or monthly and you check a box and carry on.

Changing how and when you make your mortgage payments may save you from falling into the debt loop.

I think it is one of the most overlooked items on the mortgage commitment. I have many other articles written about this topic and how it relates to your over all wealth creation, but for the purpose of this series and our current rising interest rates I will limit my explanation.

If you have credit cards and or a line of credit that you are not paying off to zero and you have accelerated biweekly payments you are paying the wrong thing first.

Your mortgage is likely the lowest interest rate loan you have. So if you are throwing more money at that, while accumulating high interest rate credit card debt, you need to change your mortgage contract. Switch to regular monthly payments and if required increase your amortization and possibly refinance.

The reality is that many Canadians have bought into the ideology of pay off your mortgage first. In doing so they choose biweekly accelerate payments without guidance or review of their overall financial situation.

If your TDS - Total Debt servicing is over 35%, stop doing biweekly payments. You are running the risk of not having enough cash flow to pay off credit cards and debts as your extra cashflow is going to the mortgage. You are making the bank rich while increasing you’re high rate debts. As you know if you have equity in your home it is not always easy to get access to it and rarely cheap or free. You must pay for appraisals, legal and often penalties just to get access to your equity in your home. I see this happening all too often with Canadians. Setting up a mortgage contract that suits you is critical and understanding how to pay off your mortgage while not curbing cashflow is imperative with rising rates and high inflation.

Call me to discuss your personal financial situation and optimize your cashflow. Your mortgage may be the solution.