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The cost of a grande latte: You can pay off your mortgage faster than you think!


The following is a guest post by Scott Dawson, a mortgage specialist with the BC-based Verico, Paragon Pacific Mortgages. From the initial consultation to mortgage completion, Scott is your man for all things mortgage. He’s one of the few mortgage brokers with an active Twitter, so get to following him fast.

Most people I know make it a daily habit to go to their local coffee shop on the way to or from work each day. It’s easy to spend $5 or more a day for the luxury of a cup of coffee.

As a mobile mortgage broker I’m guilty of it myself since I meet many of my face-to-face clients at the local Starbucks. Sitting down over a coffee, however, allows me to put into perspective the real savings you can achieve just by skipping something as simple as that morning latte.

Here’s how the numbers break down:

By forgoing the morning coffee each weekday and saving the $5, you would save an extra $25/week and be able to put an extra $1300 down on your mortgage each year.

Assuming a $250,000 mortgage with a 4.5% interest rate amortized over 25 years, making bi-weekly accelerated payments, if you made a lump sum payment of $50 each bi-weekly payment:

By skipping the weekday morning coffee you could pay your mortgage off 11 years and 9 months earlier and save a whopping $72,496.91 in interest over the life of your mortgage!

Think about that the next time you’re in line to order a grande latte.

Posted on January 10, 2012 | buzzhomeblog Posted in MARKET | Tags: , ,
  • http://www.facebook.com/profile.php?id=509982388 Neil Halper

    we pay our mortgage at double our original payment.
    McDonalds coffee is 1.77 for a large. 5 days a week * 52 weeks. now subtract for allocated holidays and vacation time (lets say about 32 days) and you actually save about $400 a year.
    Making wise consumer choices allows you to live a little while still making payments.

  • Condochris

    IF you can drink McDonalds coffee… I actually think its pretty good.

  • http://www.buzzbuzzhome.com BuzzBuzzHome

    We’ve always been partial to Tim Horton’s, but now McDonald’s is much closer to our office. The coffee ain’t bad at all!

  • http://twitter.com/ellstar Danielle

    Where are we assuming that number for a mortgage? Surely not Toronto or Vancouver..

  • Hays

    I agree with the points being raised and understand how easy it is to spend $5 on luxuries like Starbucks. However, I would like to argue that it would be even better if those same people could skip their daily smoke to or from work. A pack of cigarrettes is twice the price of a Starbucks. A grande latte maybe a little pricey but cutting out a pack of cigs would probably be a faster way to pay off the mortgage and have your Starbucks still!

  • Paul from Hammer

    Yes they Danielle I believe they are assuming a mortgage from some where in the real world and not the craziness of Toronto real estate!