Accelerated Payment

March 17, 2008

There are a few simple tips on mortgage savings that can shave off thousands of dollars in mortgage interest payment from your mortgage.

Your bank loves you and would like you to drag out your mortgage payment over a longer period. The longer you take to pay off your mortgage loan, the more interest you’ll end up paying.

The following illustration is based on $300,000 mortgage, amortized over 25 years at 3.59% per annum interest rate compounded semi-annually.

By the time you finish paying your mortgage in 25 years at the minimum of $1,5120.10 monthly payment, you would have paid $453,629.00 for your original a loan of $300,000. The interest amount is a staggering $153,639.00!

Here are some tips on saving money on your home mortgage:

Shop for the best mortgage rate
At 3.59% you pay $1,5120.1 monthly instead of $1,528.05 at 3.69%. Your interest paid on the higher rate is $161,012. You save $4,777.
Tip #2
make use of accelerated bi-weekly payment.
You pay $756.05 every 2 weeks. Mortgage paid off in 22 years 1 month. Your interest paid is $133,098 for a saving of $20,541!
Tip #3
Make yearly $2000 lump sum payment.
Maintain bi-weekly accelerated payment. Mortgage paid off in 17 years 1 month. Your interest paid is $112,758 for a saving of $40.881!
Tip #4
Increase bi-weekly payment by $100 to $660.39.
Together with $2,000 yearly lump-sum payment, your mortgage is paid off in 10 years and 8 months. Your interest paid is $69,416 for a saving of $96,820!

You can see from the above illustration, a slightly better interest rate will only save you a few thousand dollars. You can save more on mortgage interest payment if you follow some of the tips above. With a smart mortgage repayment plan, you may pay off your mortgage in 1/2 the time on the time of your 30 or 35 years mortgage.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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