Improve thyself

Originally Posted by Micro2Macro

Been thinking of goals for 2013 lately and I'll give away this one now.

Pay down an extra $20k onto my mortgage. I'm able to make lump sum payments annually without penalty. Reason is because lending has gotten tighter here in Canada and interest rates are expected to rise in the coming years, and I plan on purchasing property again within the next year or two. As far as I know putting a lump sum down will lower my monthly payments, and when it comes time to move on to another home, lower payments on my current one will allow me to generate higher cash flow when I choose to put it up for rent.

looking forward to seeing the rest of the 2013 goals..

re the bold - there are a few options, two follow. 1- you can keep the term of the loan the same and reduce the monthly payments. 2- you can keep the payments the same meaning that you're hitting way more equity (i.e. there is a lower interest component) with each payment, significantly lowering the term of the loan. I'm guessing you've done so already, but if you haven't then go and play around with an online mortgage calculator. I'm going with making lump sum payments + thinking about increasing the weekly payments. Also, look into the difference between making payments weekly vs monthly, you pay off debt materially more quickly over the course of a loan period if you make the same $ amount of payments when paid weekly. Another thing to look into - I dunno about canada, but in nz if you have mortgages over 2 or more properties it's better to preferentially pay down debt on the property you live in. This is because the interest on a rental property is deductible against rental income => less of the rent you receive is taxable.