The double-up advantage allows you to make an extra payment usually equal to your normal monthly payment. Depending on your financial institution, you can make anywhere from 1 to 12 double up payments annually.
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.
Implementing Double-Up Payment
If you make one double-up payment each year during the average 5 year term you would save the following (monthly payments remain the same):
Total Interest padi during the 5-year term: $27,810.89
Total Principle paid during the 5-year term: $13,777.26
Principle Balance left owing after 5 years: $86,222,74
What You will Save:
If you paid one extra double-up payment each year for 5 years you would save in the following ways:
You would save $414.18 in interest
You would pay the principle down by $3613.73
If you continued this process every year you would save 21 months worth of payments; that's almost 2 year's worth of mortgage payments. At $639.81 per mortgage payment that means a savings of $15,355,44 (based on 6.00% interest over the full term.)
Courtesy of Daryl Marsden, President, Maximum Mortgages