Hypotheque - Save Big Bucks on Your Mortgage

Do you realize that you can save tens of thousands of dollars on your home loan by paying the very same amount on it every month? Here is how this powerful but simple concept works.

Most people today get paid every two weeks. As we all know, things are much easier in the beginning of those two weeks than at the end. Yet, if you look at your expenses, they seem to remain relativelyfairly fixed.

But we spend the bulk of our money early in the period and then struggle at the end. The answer to this dilemma is to budget our money, and one of the most valuable and easiest ways to do this is to pay your mortgage (pret hypothecaire) every two weeks instead of once a month.

You can shave as many as seven years off the length of your mortgage with this method, and save thousands of dollars in interest while you do. For an $80,000 mortgage (hypotheque) that has a 30 year term and a 7% interest rate, this easy trick can save as much as $25,000.

How to pull this off- budget your mortgage payment out of each pay packet instead of the last paycheck of the month. (This is what the majority of people do, in order to make the first of the month due date.)

When you pay one half of your mortgage two weeks early, the outcome accumulates, and your mortgage is paid off ahead of time.

In this way, you pay lower interest on the loan in total.

This is because of the unique way that mortgage payments are calculated; most of the payment is used to pay interest, not principal. Since you pay so little of the principal, the interest keeps growing. But if you can speed up the amount of remittances, the principal part that is paid starts to rise faster. This means that your total home loan will actually be paid up earlier!

You may be able to obtain forms to make this extra payment, but if not, just send the additional check in with your account number on it. Another idea is to copy your mortgage payment form and change the due date on the extra one.

It is hard to imagine that you will have no financial implications, because you are paying the same amount, but that in using this method you can save substantially and reduce the term of your mortgage  pret hypothecaire.

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