Save on your Mortgage: Take Advantage of Double-up Payments Offered by Most Banks

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.

Each double-up payment is applied directly to the principle on your mortgage. This means you save thousands each and every time you make one of these double-up payments. Even one double-up payment per year can make a difference.

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.)

It can be hard for folks to save an entire mortgage payment to put down every year. If you can, consider this option to save on the long term cost of your mortgage. If not, consider some of the other tips such as rounding up your payments or switching to biweekly rather than monthly payments.

Courtesy of Daryl Marsden, President, Maximum Mortgages

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