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Rawski & Company

Chartered Professional Accountants,

Professional Accounting Firm, Professional Corporation

201-9488-51 Avenue, Edmonton, Alberta, T6E 5A6

780-761-1115


The following article was first published in the St. Albert Gazette:

EXPERT OPINION

To do: Save thousands-Lump sum on mortgage!

If you pay your mortgage sooner, then you pay less interest. On a $200,000 mortgage at 3.7%, with 12 years remaining of monthly payments of $1,722 per month, you would pay $48,040 of interest over the remaining term.

If you made a no risk investment in yourself, by making a lump sum payment of $12,000 in February, (instead of to your RRSP); then, you would pay $41,948 of interest.

This is an instant automatic savings of $6,092 after tax! [=$48,040-$41,948]

Let’s compare that to $12,000 invested in an RRSP at the no risk GIC rate of 2.05% for 12 years which would provide $2,250 of cash after tax. [=($12,000*(1.0205^12)-$12,000)*(100%-32% tax rate)]

Making a lump sum payment on your mortgage could have you better off by $3,842.

Cut this article out and put it on your fridge! Call us for your tax and accounting!

 © - Jacob Rawski, 2015

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Head office:

Elm Business Park, Building #1,

201-9488-51 Avenue, Edmonton, Alberta, T6E 5A6

Telephone: 780-761-1115

info@rawski.ca