Do it weekly

A million families will renew their mortgage this year. Most will end up with a higher rate than they scored during the pandemic, back in 2021.

For a while we all vexed about a mortgage cliff or tsunami or nuclear event which would blow up real estate. But, nah, didn’t happen. Resale markets were not flooded by desperate sellers who couldn’t afford their loans anymore. And while prices drifted down in an orderly correction, they didn’t crash.

So let’s forget about that. There is no mortgage crisis. Rates are 3-4% and that’s reasonable. (My first one was 12%. Years later when I was elected as an MP, my loan was 14%. In fact, they ranged as high as 21%.) Canada’s bankers won. The system did not wobble or buckle as it did in the US earlier this century. Defaults are miniscule. Profits are immense. The system is stable.

What’s worth spending time on, instead, is getting the right mortgage.

Traditional logic has been that first-time buyers – heavy on debt and short on equity with little capacity for risk – should lock in to a five-year, fixed-rate loan. That still makes sense. Know what your monthly will be for five years and shun surprises.

For more experienced owners, people with equity and growing net worth, history shows variable rates save money over extended periods of time. Most of the big guys offer VRMs with fixed payments, which means the best of both worlds. If rates rise, your payment does not – but at the same time debt repayment is reduced.

(By the way, nobody is expecting anything dramatic from central banks. Caught between inflationary pressures and a fragile economy, they don’t want to slash rates and stimulate higher prices or hike them and feed job losses. So expect the cost of money to be in a narrow range over the next year. The Fed tomorrow will likely hold again.)

If you are facing a renewal this year, financial blogger Chris Liew has some good reminders, like getting a rate commitment 120 days before the loan comes due. That will protect from any rate increases coming along in the next four months. Also dicker. Negotiate. Get another lender to make you an offer, then use that to bargain hard with your existing bank. You can always do better than the posted rate pr the first number they offer. Always.

Beyond that, here is my fav mortgage tip of all time: go weekly.

A weekly-pay mortgage is a simple, almost-painless way to accelerate debt repayment and shave years off the amortization. By paying a smaller amount every seven days instead of a large single monthly amount, the savings can be dramatic.

But be careful. There are two kinds of weekly-pay mortgage. One is useless.

Some lenders will offer a standard weekly mortgage in which the total annual payment is divided by 52 to yield a weekly amount. Don’t do it. No benefit whatsoever. Instead opt for an accelerated weekly-pay loan, where the monthly payment is divided by four to determine the weekly payment.

But, you cry, every month does not have four weeks. (Actually 11 of them don’t.) So how does that make sense?

Simple. By paying a quarter of the monthly every week you end up making the equivalent of 13 monthly payments over the course of a year. Thus an extra four weeks of payments, which go straight to the principal balance.

Secondly, since interest on a mortgage is calculated on the outstanding amount – and the weekly payments are reducing that four times faster – less accumulates to be repaid. The combination of these two – reducing the debt itself and the cost of holding it – means you get out of the clutches of evil lenders faster.

On a $500,000 loan with a 4% rates and a 25-year amortization the interest saved will be a little over $55,000, while the repayment period shortens by four years.

Seriously. Just by adding that small amount annually and going to a weekly schedule. Of course, you can also throw cash at a mortgage on the anniversary date or take advantage of other pre-payment options your lender may offer. But we’re human. We spend extra money on shoes and puppies instead of giving it to the bank. We forget the mortgage’s birthday date. We neglect to find out how amortization works or interest is calculated.

So having an automatic accelerated weekly-pay scheme in place is a simple way to trash debt, save money and feel incredibly astute. You can even go on some pathetic financial blog and brag. Try it.

About the picture: “Meet Milly (photo attached),” writes Rod. “During the hot summers in Kaleden, she spends a good part of her day lying over the cold air vent. (Cold nose, healthy dog) To be truly content though, she needs a golf ball and one of her mom’s many slippers, both of which are never far from her. She’s loved every bit as much as the human family members.

My Garth story –
In 2014 after raising my kids, I sold the house I’d owned in Victoria for 23 years and moved to Pender Island to start a hop yard with a buddy. For a place to live I took a lease on a chunk of forest and when that was done, couldn’t face another year. Problem was the house stayed damp through the winter to the point where there were orange mushrooms growing in the back bathroom; quite pretty in an outdoor setting but not what you want to see coming out of the shower.

So with no rental options available on the island, an ideal looking acreage happened to came up for sale. It seemed like a good move – lots of storage buildings for the hop yard, close to the farm, long term tenants living in one of the two houses… but it all felt too rushed so I phoned some trusted friends. One of them had been trying to get me to read your blog. He had mentioned you were against buying property and I needed to get some balance. (Friends are always so encouraging, you know?) I don’t really remember the other conversations but I distinctly remember Frank’s translated advice. “If you’ve got a good reason to buy, then do it.” So I did and have read Greater Fool religiously ever since.

I now live in a rental, 42 feet from the ocean at the highest tide. I have you to thank for that – allowing me to ditch the need to own that we boomers were brought up on. Nice to find a rental that’s way better than what I could afford to buy. Thank you for caring about and looking after us all. Your many mantras have been taken up by my family and we really appreciate your honesty, integrity and humour. I know one day the blog must end but your teachings will carry on. When a financial decision is to be made, one of our first thoughts is ‘What would Garth say?’ Not a bad legacy.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/07/28/do-it-weekly/