Hypotheque - Save Big Bucks on Your Mortgage

Do you know that you can save tens of thousands of dollars on your home loan by paying the same exact amount on it every month? It is a simple but powerful solution that not many people are aware of. - Hypotheque

We get paid each two weeks, usually. As we all know, things are usually easier in the beginning of these two weeks than at the end. This is strange, since we have similar expenses every month.

We tend to splurge a bit more when we have the cash in hand, and then have to save when it is pretty much gone. The answer to this dilemma is to budget our money, and one of the most valuable and painless 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 process, and save thousands of dollars in interest while you do. A simple instance of an $80,000 thirty year mortgage/home loan(hypotheque), with a 7% interest rate would yield about $25,000 in savings over the course of the loan.

The method is simply to budget mortgage payments and pay half out of each paycheck, instead of all out of one. (Usually the mortgage payment is taken out of the second pay of the month to meet due dates.)

The reason for this is very simple: by paying incremental portions of your mortgage early, you are reducing the total term of the mortgage.

Because of this fact, your total interest bill is less.

When you make a payment on your mortgage, the bulk of the payment is used for the interest and only a small part for the principal. Because of this, you continually pay interest on the bulk of the principal. The faster you make those interest payments, the faster you will start to drastically reduce the principal. The end result is that the principal is paid down ahead of term!

Ask your bank if they have a form to designate this choice, or just send one half in well marked with your loan number. You might even think about making extra copies of your mortgage payment coupons and just changing the date on them.

As you can observe, without any effect on the total impact on your monthly expenses, you have found the magic recipe for saving tons of interest and paying your mortgage (pret hypothecaire) down ahead of time.