Pay your mortgage off sooner

Pay your mortgage off sooner

 

I thought that most people new the tinny trick to reduce a mortgage by years just by making one simple change to their mortgage payments. The banks won’t tell you this which is why they prefer you to pay your mortgage monthly.

When you first set up your mortgage it might look something like this:

Your monthly repayments are $1362.25 and you diligently have the bank deduct the full amount as every monthly due date rolls around. So naturally, if $1362.25 is your month repayment then surely half of that would be your fortnightly repayment, right?

Did you know that twice a year we have a five week month? So this means that if your payday is a Wednesday then twice a year you will have THREE paydays in one month. Therefore, if you are paying your MONTHLY mortgage fortnightly then you are paying an extra payment every year.

And if you are paying every fortnight then your mortgage will look more like this:

Just by making this small change you are saving yourself four years and $28,217 in interest, depending on the loan amount, interest rate and years. Not bad huh?

So have a look at your mortgage and see how your bank has set this up and make the change.

 

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