Contrary to popular beliefMortgage and Loan Calculator V7 Sean Cooper Financial Data Mortgage and Loan Calculator V7 Sean Cooper Graph , your mortgage doesn’t have to be a life sentence. You can pay off your mortgage sooner without taking on a second job.  In the last blog post I discussed How to Save for Retirement and Pay Down Your Mortgage with the Total Wealth Approach (or TWA for short). In this blog post I’ll talk about how the TWA will work for me personally and my retirement. To give you a better idea of how the TWA will work, we’ve used a scenario of $200K.

Below you’ll find the financials for this $200K scenario.

• In one file you will find a projection comparing Current and New projections for the Mortgage, Loan and Net Worth. From which you can withdraw some conclusions over several periods of time.
• On the other file you will see a summary of key numbers, highlighting facts that you can use when you Blog. For example, you will find Projected Age if you do nothing, vs Projected Age when Mortgage will be paid using the TWA.

Key Considerations:

• House Value: $550,000
• Rate: 2.89%
• Amortization: 30 years
• Original Mortgage: $400,000
• Age: 30 years old
• RRSP’s of $46,000

In Summary:

• The Mortgage, after the TWA, will be paid in only 1 years vs the original 30 years. This is a reduction of almost 14 years.
  • Original projected age to pay the Mortgage was 60 years old vs current projection at 46 years old
  • There are saving of close to $100K in Interests over the amortization period of the Mortgage, which equal to an NPV of $77K
• After the Mortgage is paid, the time to repay the investment Loan is approximately 6 years
  • The projected age to completely pay both the Mortgage and the Investment Loan is 52 years
    • still 8 years earlier than the original 60 years projection without the TWA
  • The original projection of Net Worth at age 60 is approximately $2,600,000 vs a new projection of $3,000,000 at the same age
    • Assumes a 5% growth per year on the value of the Residence
    • Assumes a 6% growth on the market value of the RRSP’s
    • Assumes an 8% growth on the market value of the leveraged Investment

As you can see the TWA is a very powerful strategy. By simply following this strategy you can have your mortgage burning party years sooner and avoid the conundrum of most of homeowner of being “house rich, cash poor.”

If you’re interested in learning more about the Total Wealth Approach, join us at our next meeting for the Toronto Wealth Creation Club.

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.