Paying off your mortgage is a common goal for homeowners. The monthly obligation of mortgage payments is usually a family’s biggest financial burden, and the sooner it’s gone the better. Getting rid of your mortgage is a little like pulling off a Band-Aid. You can minimize your mortgage payments today and make your cash flow as comfortable as possible or you can put everything you have towards your mortgage to get rid of it as soon as possible.
Although life requires compromises and you need to spend money on entertainment, most of us don’t pay enough down on our mortgage each year. Mortgage payments don’t increase with inflation like the rest of our expenses, but we can voluntarily increase our payment to pay our mortgage off faster. Most mortgages allow payment increases by as must as 15% EACH year (this is in addition to lump sum privilege payments). By increasing your mortgage payments by only 3% each year you can pay off your mortgage 8 years and 2 months faster! That’s a small increase with a big pay-off. A $300,000 mortgage amortized over 25 years at today’s rates requires a monthly payment of $1,459 per month. A 3% increase is an extra $44 per month or $11 per week. Surely we can all find an extra $11 per week to shave 8 years off our mortgage.
More aggressive annual increases or applying a lump sum once a year will have an even greater impact. Call me to work out a plan that works with your mortgage and for your lifestyle.