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How to Pay-Off Your Debt Faster & Save Money | Paying Down Mortgages & Loans


Here are the most effective methods for paying off your debt fast and saving yourself some funds. These techniques save you the most money when used on mortgages (because mortgages involve big numbers and long periods of time), however, they can also be used to pay down other debts quickly.

Pay Bi-weekly Rather Than Monthly

Easiest way to pay your mortgage down faster is bi-weekly mortgage payments rather than monthly payments will reduce the time it takes to pay off your mortgage by several years. This payment arrangement will provide lesser interest rate on the outstanding balance and saves funds from the interest amount computed from the by-monthly cost.

Most people would never guess that making the equivalent of one extra mortgage payment each year could save so much money. If you want to be aggressive, you can pay weekly, but unless you’re super organized with your bank accounts and money, stick with bi-weekly payments to match your pay cheques.

Here’s a table to see how monthly, accelerated bi-weekly, and accelerated weekly payments compare.

Accelerated Mortgage Payments

Assuming a mortgage of $172,000 at 5% interest over 25 years
Type of Mortgage Payment Monthly Payment Accelerated Bi-Weekly Payment Accelerated Weekly Payment
How it works This is what lender determines that you must pay each month. Cut monthly payment in half and pay that amount every two weeks. Divide monthly payment into quarters and pay one quarter of monthly payment every week.
Payments $1,000 $500 $250
Years to pay off mortgage (Amortization) 25 years 21.4 years 21.4 years
Savings over the life of the mortgage $0 $21,536 $21,774






Round Up Your Payments

Round your payment up to the next large number. Paying any amount extra each month will help get debt paid faster.

Rounding Up Your Payments  
Type of Loan Mortgage Car Loan Credit Card
Original monthly payment $960 $373 $140
Rounded up payment $1,000 $400 $160
Reduced life of loan 25 years down to 23.2 years 60 months down to 56 9 years down to 6.6 years
Savings over the life of  loan $10,686 $389 $2,465


Putting It All Together to Pay Off Your Mortgage More Quickly

If you get aggressive with mortgage payments, round them up to a higher number and cut that number in half and pay it bi-weekly. Make sure that your budget can handle these larger payments. You may talk to your lender about creating a safety net to fall back on if you end up taking on more than you can chew. You can set up mortgage with the lowest payments and sign a voluntary payment option agreement to accelerate payments. If your finances become strained you can revert to a lower amount or the minimum that you’re required to pay. Be sure to check that you’re allowed to increase payments.


Author: Michael Welter

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