I scheduled a lump sum payment towards my mortgage today. Next Friday, $10,000 will come out of my bank account to pay down my outstanding balance. I’m on a variable rate mortgage and stupidly, I didn’t lock into a fixed rate mortgage several months ago when it made sense. In the last year or so, the Bank of Canada has raised the prime interest rate steadily. It’s at the point now where doesn’t make sense to keep my money in a savings account because the interest rate on my mortgage far outstrips what I get in said savings account.
I haven’t made a lump sum payment in many years because it made more sense to keep my money elsewhere, where it could make more money for me. With the higher interest rates now, paying down debt has a higher priority. Even if the prime rate stays the same, I am likely going to make another lump sum payment in 2023, probably before the summer.
In a year or two, we might be getting into the territory where I think about paying off my entire mortgage if I liquidate a few investments. I hope I can be so lucky.