Every once in a while I reply on my friends in the mortgage industry to help my clients save some money on their mortgage. Toping up your mortgage payments by $50 or $100 can make a big difference. At the bottom of the article are links to previous posts with some other great options.
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 save $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. 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 $835.81. If you can afford to pay the $900 then talk to your financial institution about rounding up your payments.
Courtesy of Daryl Marsden, Maximum Mortgages
In House Royal LePage Foothills trusted brokers
Previous Posts to save on your mortgage:
Previous Post: Dual Benefit of a Low Mortgage Rate
Previous Post: Take Advantage of Double up Payments Offered by Most Banks
Previous Post: Beyond the Interest Rate
Previous Post: Shortening the Amortization Period on your Mortgage
Previous Post: The Effects of Weekly or Bi-Weekly Mortgage Payments