Tip #3: Take Advantage of Double-up Payments Offered by Most Banks

The double-up advantage allows you to make an extra payment usually equal to your normal monthly payment. Depending on your financial institution, you can make anywhere from 1 to 12 double-up payments annually.

Each double-up payment is applied directly to the principle on your mortgage. This means you save thousands each and every time you make one of these double-up payments. Even one double-up payment per year can make a difference.

Example
Based on a $100,000 mortgage at 6.00% interest for a 5-year term amortized over 25-years:
• Your monthly payment would be $639.81
• You would pay $28,225.07 in interest over the first 5 years
• You would pay $10,163.50 in principle over the same 5 years

Implementing Double-Up Payment
If you make one double-up payment each year during the average 5-year term you would save the following (monthly payment remains the same):
• Total Interest paid during 5-year term: $27,810.89
• Total Principle paid during 5-year term: $13,777.26
• Principle Balance left owing after 5 years: $86,222.74

What You Will Save
If you paid one extra double-up payment each year for 5 years you would save in the following ways:
• You would save $414.18 in interest
• You would pay the principle down by $3,613.73
• If you continued this process every year you would save 21 months worth of payments; that’s almost 2 year’s worth of mortgage payments. At $639.81 per mortgage payment that means a savings of $15,355.44 (based on 6.00% interest
over full term)

That’s only $639.81 per year…do you think you could make one extra payment per year?

There are many people who make their mortgage payments every month just as they have committed to do. They are raising a family and have all the normal expenses of day-to-day living. Saving an extra $639.81 per year can appear to be an un-achievable goal.

This Next Tip will make saving this money just a bit easier, but can result in the same type of savings…