The main objective of any mortgage borrower is to pay down there mortgage as soon as possible. Naturally coming up with the money to do this is not that easy. Two ways to chip away at your mortgage is to take an accelerated payment frequency and take advantage of the automatic payment increase allowed on your mortgage by your mortgage lender. Here is an example.
A $300,000.00 mortgage at a interest rate of 3.40% for 5 years over a 25 year amortization would have a mortgage payment of $1482.02. Mortgage balance after 5 year term is up $258,364.25 with 20 years amortization remaining.
The same mortgage on an accelerated bi weekly payment of $741.01 would leave you with a mortgage balance of $250,224.97 with 17 years and 2 months amortization remaining.
The same bi weekly mortgage with a $100.00 increase in mortgage payment bi weekly $841.01 would leave you with a mortgage balance of mortgage $236,074.11. The amortization remaining would be 13 years and six months.
The amortization is based on the life of the mortgage i.e. if you kept this payment habit up using the same rate you would pay down your mortgage in that amount of time. You can see the impact on the mortgage balance by just taken a bi weekly payment frequency and or a $100.00 payment increase. Remember every dollar you put towards your mortgage goes directly to principle.
For more details or to obtain a pre-approval please contact:
Robert Clancy, AMP,
VERICO Safebridge Mortgage Solutions