• How to save $73,033 on your mortgage

    I did a quick screen capture of this TD Canada Trust mortgage calculator page.

    mortgage savings

    I was NOT surprised to see that if you pay your mortgage weekly, you'll pay off your mortgage 5 years soon and save $73,033! But it is an interesting illustration to think about.

    I should point out that you if you're paying weekly, you're actually putting out more cash per year than you are monthly.

    As follows:
    Weekly Payment: $ 465.10 x 52 weeks = $24,185.20 cash outlay
    Monthly Payment: $1,860.40x 12 months = $22,324.80 cash outlay

    By paying weekly you;re paying $24,185.20 - $22,324.80 = $1,860.40 more per year. This is the equivalent of one extra months payments.

    The mortgage interest savings of $73,033 is alot of money. This money could be put into an RRSP for your retirement savings instead of paying it on mortgage interest. I'm sure the banks don't mind if you pay them more interest, however, it leaves you with less money when you'll need it the most, At retirement.


 
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5 Comments
On Sep 30, 2008, Brian Peterson Said:
Pay your mortgage weekly or biweekly NOT semi monthly. You can usually change your payment options mid-term, just contact your lender.
Weekly or (accelerated) bi weekly means you make 1/4 or 1/2 of the regular monthly payment.
So if you are making the biweekly payment you make 26 half payments per year for a toal of 13 monthly payments. A relative easy way to make extra payments on your mortgage. Typically this will save a little over 5 years of payments on a standard 25 year mortgage. The effect will be more pronounced on longer amortizations and less on shorter amortizations.
Brian Peterson
On Feb 20, 2008, Monty Loree Said:
Hey VitzBitz
Call beatrice from www.beatricescott.com
she's been a guest on my blog podcast, and is a mortgage specialist.
The good thing about the internet is that it's a great place to shop for things and ask questions.
On Feb 20, 2008, Vitzbitz Said:
Cool,

I'd ask my broker but they tend to get all excited, and it seems kinda unfair as we're not refinancing for about 3 years.

-GRIN-
On Feb 20, 2008, Monty Loree Said:
hey Vitzbitz,
I would assume so..
I will talk to a mortgage specialist and get a good answer for you.

Thanks.
On Feb 19, 2008, Vitzbitz Said:
Now, when we got our mortage a few years ago we chose accelerated bi-weekly with a top-up. By our calculations it saves us about 8 years off the mortgage (assuming all things are equal natch), but is there any difference between accelerated bi-weekly and accelerated weekly?

Both result in an extra months payment per year, right?
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