Save on your Mortgage: Pay an extra $50 or $100 per Payment

Using this method you make an extra payment towards your principle every regular payment. Depending on whether you choose to make your payments monthly, bi-weekly or weekly you can choose to pay a little bit extra on your principle with every payment.
Many people use this method when on a restricted budget. It is easier to pay $50 to $100 each month than one lump sum. How much money and time can we save using this method?
Based on a $100,000 mortgage at 6.00% interest for a 5-year term amortized over 25 years.
Your montly payment would be $639.81.
You would pay $28,225.07 in interest over the first 5 years.
You would pay $10,163.50 in principle over the same 5 years.
Principle Balance left owing after 5 years: $89,836.47
What You will Save by Adding $50 per month:
If you paid an extra $50 per month, each month for 5 years.
You would save $388.34 in interest
You would pay the principle down by $3,388.34
If you continued this process every year you would save 18 months worth of payments; 1 1/2 year's worth of mortgage payments. At $639.81 per mortage payment that means a savings of $11,516.58
This method makes it easier for many people to budget and save.
Courtesy of Daryl Marsden, VERICO Canada Mortgage Direct. Contact Daryl at 403-605-5711.

p.s. Another idea to consider is to round up your payments. Sometimes for a budget it is easier to remember that your monthly mortgage payment is $900 than $865.81. If you can afford to pay the $900 then talk to your financial institution about rounding up your payments.

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