Why borrowers are smarter than they look

A new study shows that mortgage holders are paying off their homes faster and faster

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From the December 2014 issue of the magazine.

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Canadians are constantly criticized taking on too much debt in today’s low interest rate environment. But a new study shows that mortgage holders are paying off their homes faster and faster, thanks to extra payments that are applied to the principal owing rather than the interest. The result is the average amortization has dropped from 25 years to 20. Making extra payments has another benefit for borrowers: In the event of a rate hike, you can simply return to your regular amortization payment schedule.

Borrowers

Source: Bank of Canada, Statistics Canada, CIBC

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