How to Pay Your Mortgage Off in Half the Time

How to Pay Your Mortgage Off in Half the Time

 

You can easily cut your mortgage in half by making one extra principle payment each month.  A 30 year mortgage can be reduced to 15 years.

 

How it Works.

 

When you pay your monthly mortgage payment of principle and interest pay a second amount for the principle portion of the mortgage that is due the following month.  Generally your mortgage is a fixed amount e.g. $1,000 per month.

 

In the Amortisation Schedule example below you can see that the principle payment for the first month is $88.47 and the interest payment is $1,666.67 and the total payment for the first month is $1,755.14. 

 

Using this strategy you would pay the $1,755.14 and $89.21 (second principal payment) in the first month.  In the second month you would pay the $1,755.14 and $89.95 (third principal payment) in the second month and so on until you have paid the loan off in half the time.

 

By doing it this way you do not need to pay interest on the principle amount for the next month.

 

You will need to get an amortisation schedule from your lender to do this strategy.

 

Example Amortization Schedule

Loan Date: 11/25/2008 Principal: $200,000.00 # of Payments: 360 Interest Rate: 10.00% Payment: $1,755.14
Schedule of Payments Please allow for slight rounding differences.
Pmt #	Date	Principal	Interest	Payment	Balance
1	12/25/2008	$88.47	$1,666.67	$1,755.14	$199,911.53
Total	2008	$88.47	$1,666.67
2	1/25/2009	$89.21	$1,665.93	$1,755.14	$199,822.32
3	2/25/2009	$89.95	$1,665.19	$1,755.14	$199,732.37
4	3/25/2009	$90.70	$1,664.44	$1,755.14	$199,641.67
5	4/25/2009	$91.46	$1,663.68	$1,755.14	$199,550.21
6	5/25/2009	$92.22	$1,662.92	$1,755.14	$199,457.99
7	6/25/2009	$92.99	$1,662.15	$1,755.14	$199,365.00
8	7/25/2009	$93.76	$1,661.38	$1,755.14	$199,271.24
9	8/25/2009	$94.55	$1,660.59	$1,755.14	$199,176.69
10	9/25/2009	$95.33	$1,659.81	$1,755.14	$199,081.36
11	10/25/2009	$96.13	$1,659.01	$1,755.14	$198,985.23
12	11/25/2009	$96.93	$1,658.21	$1,755.14	$198,888.30
13	12/25/2009	$97.74	$1,657.40	$1,755.14	$198,790.56
Total	2009	$1,120.97	$19,940.71

 

For more investment strategies:  http://www.21stcenturyacademy.com.au/cmd.php?af=823030

 

 

 

Tags: Amortisation, Amortization, finance, Home, Home Loan, Investing, Investment, Loan, Money, Mortgage, Pay, Quicker, Reduce, Save