According to a recent survey, 48 percent of Canadians expecting tax refunds this year plan to use them to pay off credit cards and other bills. Only four percent of those surveyed plan to use tax refunds to pay down their mortgages.
The Leger Marketing survey was commissioned by BMO Nesbitt Burns. Of those surveyed:
21% plan to reinvest their refunds in tax free savings accounts (TFSAs) or registered retirement savings plans (RRSPs)
15% plan to put funds toward home renovations or household expenses
12% intend to buy vacation or leisure items
Directing your tax refund toward your mortgage principal could save you thousands of dollars by helping you to pay off your mortgage sooner.
Admittedly, mortgage payments don’t provide the instant gratification you get from landing in exotic climbs or turning your patio into a living room. However, it is a smart thing to do if you are planning to retire with less debtand more equity in your home.
CENTUM Canada offers six different types of mortgage calculators to help you decide what you can afford, including: qualifying amounts based on your income, payment frequency options, whether it’s better to rent or own and how much a prepayment (lump sum payment) could save you over the life of your mortgage.
Along with the survey results comes a reminder to check with your lender about restrictions regarding making lump sum mortgage payments.
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Updated:August 01, 2017
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