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Reduce Your Mortgage Balance

on 04 May 2015
Reduce your mortgage balance with the Principal Reduction Strategy.

Here's how it works for fixed and variable rate mortgages.

Variable Rate Mortgage

Set your mortgage payments at the current 5-year fixed rate and allocate the difference to go directly towards the principal. Instead of paying the bank the extra spread you're paying yourself. When your mortgage comes up for renewal and if interest rates have risen, it will be less of an impact on your new monthly payment. Plus, you would have paid down your principal reducing your new payments further. 

The current 5-year variable rate is Prime-0.70 (2.15%)
The current 5-year fixed rate is 2.69%

Fixed Mortgage Rate

If you are in a fixed rate mortgage, you can increase your monthly payment. Most lenders have flexible pre-payment privileges that allow you to up to "double" your monthly mortgage payments as well as make lump sum payments.

For Example: 
Even if you pay $100.00 more a month on a $400,000 mortgage you will reduce your amortization by 2.5 years and save over $6,400.00 (based on a 5-year fixed rate of 2.69% - 30 year amortization).

As always a plan that works best for your needs is to be based on your individual circumstance. If you would like to take advantage of reducing your mortgage principal or have any questions please contact our office. We're here to help.


all rates are subject to change. terms and conditions may apply.