WAYS YOU CAN Example: Assume a $100,000
mortgage with an amortization period of 25 years and an interest rate of 4% over a five-year term.
Say Goodbye To Your Mortgage Faster! Increase the frequency of your payment. If you’re paying your mortgage on a monthly basis, you can arrange to switch your payment to half of the monthly payment amount on a biweekly basis. As a result, you’ll actually make 26 payments a year. Most homeowners don’t miss the extra amount but always notice the savings.
Take advantage of increased payment options. Increase your payment on your mortgage. Most people are surprised by how easy it is to adjust their lifestyle to a slight increase in their mortgage payments.
Take advantage of lump-sum payments. In addition to increased payment options, most banks offer the opportunity to make lump-sum payments on a mortgage. An annual lump-sum payment of just 2% is all it takes for many homeowners to pay off their mortgage years ahead of schedule.
Take a shorter amortization. To shorten an amortization period from the industry standard 25 years to 10, 15 or 20 years instead. The result is slightly higher mortgage payments but significant interest savings over time.
PAYMENT FREQUENCY
NO. OF PAYMENTS PER YEAR
PAYMENT AMOUNT
INTEREST FOR THE TERM
TERM ENDING PRINCIPAL BALANCE
AMORTIZATION REMAINING AFTER 5YRS
YEARS SAVED OVER LIFE OF MORTGAGE
MONTHLY
12
$526.03
$18,614.92
$87,053.12
20yrs
0yrs
BIWEEKLY
26
$263.02
$18,296.53
$84,049.19
16yrs 42 wks
3yrs, 10wks
WEEKLY
52
$131.51
$18,282.17
$84,034.84
16yrs 41 wks
3yrs, 11wks
20 | Buyer’s & Seller’s Guide
