From age twenty-four to thirty-four. How much money went towards our mortgage and how can we apply it to our future lives. On an original mortgage of $191,085.38 in 2009. As of 2019 the same mortgage has a balance that sits at $146,422.26.
$44,663.12 is the principal portion paid. Principal not including the interest.
Let us do some more arithmetic to give you a better idea as to how much money was spent on paying the monthly mortgage for the past ten years, and how much of it actually was applied to the principal portion to reduce the loan.
Our mortgage payments where setup as a bi-weekly occurrence at the price of $472.00. For the sake of simplicity we will leave interest rate calculations for another time.
$472×2= Monthly mortgage payment. Because we lived in a condominium, there were monthly maintenance fees included. We’ll average it at $390.00 as they increased from their initial amount of $377.00 after year 6 and made steady increase since to reach $427.00 as of year ten.
Monthly mortgage is $944.00 + $390.00 for maintenance. Total: $1334.00
With a monthly payment of $1334.00 we can now get a scope of how much we spent on our mortgage and maintenance a year. $16,008. Wouldn’t it be nice if we could add this amount into our bank accounts, versus paying it to the banks?
All right, let’s get a better scope of how much money actually goes to the bank versus how much we spend in total. In total we know that $16,008 x Ten years = $160,080.00. However, this is including the maintenance fee that the bank doesn’t receive. Our new calculations minus the maintenance fee is…
$113,280 – 44,663.12 = $68,616.88 is the amount of interest paid within that ten year timeframe.
Remember our original mortgage loan? Did we forget to mention that it was a loan amortized to the max? And back then the amortization period could be extended to thirty five years. Yes, thirty five years. And that was the option we chose. How else do you get your mortgage payment to such a low rate with only five percent down payment?
What would be the result if we took the money we spent on our mortgage and put it towards a high-interest savings account?
What happens when we practice patience and decide to purchase a home ten years down the road?
These are just a few questions to get us started on the financial educational path.
Most of our financial education came in the form of debt, consumer proposal, and having to rebuild our credit rating. We believe that this process of learning could have been avoided through coaching from an early age.
We believe that it is a vital component when raising a family to include finances and economics in the daily conversation. If we expect our children to have a fighting change in this world then we need to equip them with the tools and knowledge they will need in order to achieve the success we hope for them.
So what have we learned in our ten years of having a mortgage?
We rush out to get ourselves into a mortgage without having a full game plan. Here are a list of things we have learned from having a mortgage for ten years.
- If you own a condominium you should rent out your unit after you have lived in it for at least three years.
- Assess the real estate environment. See what the prices are for rental and make sure they are comparable to your mortgage payments.
- If you find yourself in debt, let filing for consumer proposal or bankruptcy be used as your last result.