How to lower my mortgage costs

If you signed up for mortgage life insurance with the bank or mortgage company when you signed the mortgage then you are almost certainly overpaying for that insurance. And not just a little bit – but substantially so. Enough that it’s well worth it to look into lower priced alternatives and switching to them.

The alternative to bank mortgage life insurance that consumer financial advocates recommend is term life insurance, sourced through an independent life insurance broker. Term life insurance is almost always SUBSTANTIALLY cheaper than bank mortgage life insurance, often to the tune of 50% savings. If you’re paying $200/month for bank mortgage life insurance, it’s entirely possible that you could purchase a comparable or better term life insurance policy for as low as $100/month.

That savings, while not directly part of your mortgage, is often viewed as a cost of the mortgage as is purchased at the same time as your mortgage, and often buried in the monthly costs of the mortgage. And you can take those savings every single month and use them for your TFSA/RRSP, to pay down other debt, or use it as an extra payment towards your mortgage resulting in a shorter amortization period (mortgage gets paid off faster).

Hard to believe the savings are that substantial? Mortgage life insurance costs more than term life insurance for a variety of reasons. First, term life insurance is heavily shopped by brokers and consumers resulting in a marketplace where pricing is cutthroat (to your benefit). In comparison, nobody every questions the price of mortgage life insurance. They’re simply presented with the cost when they sign their mortgage papers and asked if they want the insurance or not – nobody ever shops these prices (don’t be dismayed if you didn’t check the prices – nobody does this).