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.
Source: Bank of Canada, Statistics Canada, CIBC