Pay Off Your Mortgage Faster and save thousands of dollars.

When taking out a mortgage there are several methods of repaying the cost for your home.

           1 -  Monthly Mortgage Payments
           2 - Bi-Weekly Mortgage Payments
           3 - Weekly Mortgage Payments
           4 - Accelerated Bi-Weekly Mortgage Payments
           5 - Accelerated Weekly Mortgage Payments

Monthly payments are calculated for the term of your mortgage so a 25 year mortgage will take 25yrs to pay off. Sounds obvious, but read on…

Payments made over the 25 years for a mortgage of $300,000 at 5.5% interest.


Accelerated       Bi-Weekly
Accelerated Weekly
Payment Amount
 $     1,842.26
 $        849.23
 $        424.39
 $        921.13
 $         460.75
Total Payments
 $ 507,983.97
Total Interest
 $ 207,983.97
 $     1,360.30
 $     1,942.52
 $   88,373.50
 $   89,983.97
Time to Pay
25 Years
25 Years
25 Years
21.27 Years
21.21 Years

So, if you are interested in decreasing the number of years to pay off your mortgage – and save money on interest payments - as can be seen in the above chart the best method is either of the accelerated mortgage payments. How does this work? Because the monthly payments are calculated as a 25 year mortgage with one payment every month and then for Accelerated Bi-Weekly payments simply divide the monthly payment by 2 and for Accelerated Weekly payments are divided by 4. Although at first glance it might seem that the amount paid monthly would be the same but they are not. For example, if are making one payment per week, you are actually making 4 payments every 28 days instead of every 30.5 days (which is the average number of days in a month). This means you are paying off your mortgage a little bit faster every month, which lowers the interest you will pay over the life of the mortgage These accelerated payment methods can reduce your mortgage by up to 4 years and save you tens-of-thousands of dollars in interest.

Another way of reducing interest is using a variable rate mortgage which can be as low as 2.25%. But if the bank rate climbs, the interest rate would increase accordingly so would your payment. To guarantee that you do not pay excessive interest rate some banks will give you a mortgage term interest say 5.5% and a variable rate of say 2.25%. You will make mortgage payments based on the 5.5% but the interest is based on the 2.25% rate. While the variable rate is lower than the term rate you will be paying down your mortgage principal faster. And, if the variable rate increases above the term rate you convert to the mortgage term rate 5.5%. This could greatly reduce the length of the mortgage and protect you from high interest increases, so it is worth asking you bank if they offer this kind of protection.

Some mortgages allow you to make a lump sum payment, or pay a percentage of your loan, yearly; also some allow you to increase your mortgage payment. All of these will bring down the length of time of your mortgage and save thousands of dollars in interest.

For first time buyers the purchase of a home can be quite daunting so you have to make sure that you are aware of all expenses to be paid, normally a bank requires 20% down payment, and there are lawyer’s fees, maybe land/stamp duty taxes and other related fees, these could cost from $5,000 to $12,000, in some states you could request from the seller of the home help towards the closing costs the amount depends on your closing costs. If you are buying a condo there are monthly maintenance fees so these have to be taken into consideration for the monthly expenses. For information on other “hidden costs” when purchasing a property see the article “First Time Buyers” on our website.

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