I've a appx 450K mortgage left at 2.49% (5 year term with a 25 year mortgage). I've a few options to pay my mortgage faster
- Increase principal payment amount once/year
- Change payment frequency from monthly to weekly / bi-weekly
- Lump sum payment once/year
My mortgage is going to renew in 1.5 years and I assume my refinancing rate is not going to be more than 3 odd %. (Currently you can get a 5 year term term / 25 year amortization for 2.69%).
Having said that if there is an extra 200$ every month, Which option would be better for me?
- Increase the payment amount by $200 / month
- Change payment frequency to weekly/bi-weekly
- Invest the $200 each month and then pay the lump sum amount at certain point in time.
I'm leaning towards #3 because my investments have been growing at a higher % than the loan rate.
I'am thinking of investing the $200/month in a Tax free investment account (TFSA) and then pay a lump sum if refinancing mortgage ever goes higher than 3.5%. If it does not happen during the refinancing date (every 5 years), then keep investing in the TFSA.
Am I right in assuming that this is correct for me?
I do not have any other form of debt.
The $200 is the extra amount I have after moving some $$$ into my TFSA (Tax Free Investment) and RRSP (Retirement plan) accounts.