Tips To Pay Off Your Mortgage Fast - Part 1

I'm going to share some tips I've used to save me a tonne of money on my mortgage thus far. If you follow these simple steps you will save anywhere from a few hundred to tens of thousands of dollars or more depending on where you are in your mortgage and its amount! The first thing I would suggest is you get an amortization payment schedule for your mortgage so you can see exactly how much money you are paying in interest and compare how much of that you can save with my tips. You can get this schedule from your lending institution, just ask your mortgage specialist. Okay, now let's save some money!

1. Set your mortgage up for bi-weekly payments. This will shave almost 5 years off a 25 year amortized mortgage because you end up making 1 extra payment a year compared to monthly. Let's say you mortgage payment is $1000 a month. If you are paying monthly, you would make 12 payments of $1000 for a total of $12,000 a year. If this is set up bi-weekly, you would make 26 payments of $500 for a total of $13,000 a year. You can see how this will add up over the life of your mortgage.


2. If you can afford it, make a lump sum payment. Most mortgages will allow you to make yearly lump sum payments to some degree. My mortgage will allow me to pay up to 15% of the principal amount yearly. This is even more effective if you have a newer mortgage because mortgages are front loaded with interest. What I mean by front loaded is that most of your payment in the early part of a mortgage is going to interest while in the last few years most of the payment is going to principal. Banks aren't stupid and they are also money hungry PIGS if you ask me so they ensure they get their interest early in case something was to happen down the road! As I was saying, these lump sum payments will go directly against the principal amount which can save you a tonne in interest of the years to come because every payment you make after the lump sum, more of these payments will go towards the principal. Let's go through a scenario. Assume a mortgage amount of $200,000 amortized over 25 years at 6% making monthly payments. Let's say 8 months into the mortgage you come into some extra money, say $2000 and applied that to the mortgage. This would save you $6544.68 in interest payments and pay off the mortgage 6 months earlier! Imagine if you could apply a lump sum each year; you could pay off your mortgage in half the time!

Stay tuned for more tips in the near future that will save you more money. In the meantime, here are some very helpful reads.

Want to live mortgage free? Click Here to find out more.

Do you currently rent? Would you like to live rent free and learn how to have someone else pay the next payment for you? Read this to find out more. Live Rent Free

Here is a very interesting concept that a friend introduced me to. I'm about half way through the book and really like the idea and what I've seen so far. Craig Romero is the author of “Mortgage Cycling Revealed”. Craig is a mortgage expert and reveals how to pay off your mortgage in less than 10 years using his Mortgage Cycling process. Click here to learn more.