Paying off your mortgage as quickly as possible could be the smartest
investment of your life, according to Ron De Silva, vice-president of Invis
Financial Group of Vancouver.

De Silva, who works with many retired and wanna-be retired Canadians, says "it's quite shocking" as to how many people are retiring with mortgages still on their homes and only meager pension income to make the payments.

To many of these retirees their mortgage is a debt until death, he notes.
Somewhere along the way they missed out on opportunities to take advantage of simple strategies that would have had them mortgage-free years earlier.  In addition, mortgage interest on a principal residence is not tax-deductible in Canada, as it is in the United States.  Owners, therefore, are making mortgage payments of both principal and interest with money that they have already paid tax on -- after tax dollars.

"Let's say you took out a $100,000 mortgage today, at 6 percent amortized over 25 years.  Your monthly payment will be $639.81.  In 25 years, you would have to repay over $190,000 for the mortgage including principal and interest, " De Silva explained.  Yet, he notes, there are three nearly painless tactics on paying your mortgage down faster.

Here are De Silva's top three suggestions:

Tip No. 1:  Using the example mortgage scenario above, the first tip is to
increase your monthly payments by just $60.19 per month, effectively
rounding up the mortgage payment to an even $700 over the lifetime of the mortgage.  The immediate result will be that you will pay off your mortgage in 20 years and 8 months.  You would realize a total interest saving of over $18,000 over the life of the mortgage.  Most of us spend $60 a month, without even knowing it.  Skip the large-double-double latte on your way into work. Not only will you escape the dreaded, donut shop drive-thru and get to work faster; you'll also be well on your way to being mortgage-free, faster.

Tip No. 2:  Now that your amortization is down to 20 years and 8 months, put a principal pre-payment plan in to motion.  Simply stated, a pre-payment is
making an additional lump-sum payment to lower your outstanding principal.

If you take out an RRSP (Registered Retirement Savings Plan) loan to get the maximum tax refund due to you, simply apply the tax refund to the mortgage principal.  In our example, a tax refund of just $1,200 applied to the principal once a year will reduce your amortization down to 16.5 years - with an interest savings of over $35,000.  Imagine the savings if you could pay more than $1200, a year against the principal.

Tip No 3:  Make your mortgage payments as often as you are paid.  Making weekly or biweekly payments has a dramatic effect on how fast you pay off your mortgage.  In our example, so far, we have taken the original mortgage from a 25-year amortization down to 16.5 years.  Now let's take the same monthly mortgage payment of $700 per month and divide by two, for a
biweekly payment of $350.  By paying your mortgage biweekly, you will pay off this mortgage in 14 years and 8 months with a total interest savings from all three tips of over $41,000 over the life of the mortgage.

"I highly recommend that you set 20 minutes aside, confer with your spouse and figure out what you can afford, to implement tip number one.  Once you put that in motion, tips two and three will come easily," De Silva said.