Hidden Bites From Vacation To Pay Off Mortgage



It may be prudent to re-receive any excess funds that you overpaid on your loan before you ask for leave to repay. And, to the credit of many banks, this is what they advise their clients to do. However, if your lender hasn’t mentioned this, be sure to ask.

However, don’t expect a positive answer if you are using a fixed rate mortgage.

Fixed rate mortgages usually do not have the ability to re-arrange. In this case, if you need a day off, the recapitalization of the loan may be inevitable.

Assuming you can get the surplus before you pause your payments, what do you do with those funds instead?

If possible, the money should be deposited into a mortgage account that works alongside your home loan. This will save you the same amount as if you instead put the overpayment straight into the loan. This also has strategic advantages.


With a surcharge to the compensation account, technically, the loan balance does not fall … only the interest you pay falls. The huge benefit of doing this is keeping your options open for the future.

If you wish to move later, a good home deposit can be readily available in your credit account. You can even go ahead and leave your original property to rent it out.

Since, technically, the loan balance never fell below the planned maturity dates, this could be a viable investment property.

The usual approach to investment property is to maximize tax deductions, including interest.

Whether you are looking to apply for a payback vacation in the near future or not, your finances will be safer and more flexible with a compensation account. For every dollar you have, you could have gotten out of debt many years earlier.

  • The tips in this article are general in nature and are not intended to influence readers’ decisions about financial products. They should seek professional advice before making financial decisions.

Nicole Pedersen-McKinnon is the author How to get a no mortgage like me… Follow Nicole on Facebook, Twitter or Instagram


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