You want to pay off your mortgage as quickly as possible with the least cost in interest charges. The problem is that the lenders have designed traditional mortgages in their favour. They want you to focus on the interest rate exclusively, and often confuse you with various terms and amortization schedules.

The traditional mortgage playing field is about to change. There will be much advertising and promotion to market the new generation of mortgage products to the Canadian public. If treated with respect, these new mortgages could save you thousands, and allow you to pay off your mortgage years earlier. However, without the proper care and discipline that these products deserve, you could find yourself in a mine field of debt.

The concept is quite simple. As long as you have at least 25% equity in your home, you can apply for a mortgage worth 75% of the value of your home. Your mortgage and your income work together as one account. Rather than having your pay cheque deposited directly into a chequing account which pays virtually nothing, your income is applied directly to your mortgage balance. You instantly reduce the amount you owe, saving you interest charges immediately. You then slowly increase the amount you owe as you pay your monthly bills and expenses. As long as the money going into your account exceeds the money going out, your debt will be reduced. Your idle money goes to work with the potential to save you thousands in interest cost.

Interest is calculated on the daily balance owing and floats with prevailing interest rates. At the end of the month you receive a statement showing the date your pay cheque was applied to your balance and the withdrawals you made during the month. You save interest cost every day that your income stays in your account. If you receive a financial windfall such as a bonus or inheritance, you can deposit this money immediately and reduce your debt. You have complete flexibility to make payments in any amount at any time.

As long as your outstanding debt is below the 75% limit, you can borrow additional money any time you want. There is no need to ever apply for another loan, no questions, no interviews and no waiting. You are always approved for credit, just write a cheque.

This is truly a revolutionary mortgage product. With proper planning you could save money and be debt free years ahead of schedule. You can immediately see the benefits, but it is not for everyone. Speak to your financial planner to make a plan and get all the details with full disclosure.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.