Pay off your mortgage faster and achieve your dream of early retirement…

How can you pay of your mortgage years faster and save thousands in interest costs over the life of your mortgage? Simple if you switch your monthly mortgage payment to a bi-weekly or weekly rapid payment schedule!

Bi-weekly and weekly rapid payment options have been growing dramatically in popularity in Canada and many institutions now offer this option.  The reason this ends up reducing your amortization and interest costs so dramatically is the way the payment is calculated.  You take the monthly payment and divide it by four (weekly) or two (bi-weekly.  By doing this you end up reducing your mortgage principal each year by the amount of the monthly payment.

For example, if your monthly mortgage payment was $800.00 you would make a total yearly payment of $9,600 ($800 x 12).  By dividing this by 4 you would have a weekly payment of $200 and thus pay a total yearly amount of $10,400 ($200 x 52).  Or if you were paying bi-weekly you would pay $400 and again pay a yearly total amount of $10,400.  This would result in an additional $800 being applied to your mortgage each year, which would directly reduce the principal.  By taking advantage of an accelerated payment plan you could reduce a 25-year mortgage to 21 years.  That’s four years of mortgage payments saved.  Since your mortgage payments are made with “after tax” dollars this is a huge savings!

Below is an illustration of a mortgage of $300,000 over a 25-year amortization period at 5.0%:

Payment Frequency	Amount	AmortizationYears	Total Interest Paid	Savings vs. Monthly Payment
Monthly	$1,744.82	25.0	$223,332	$0
Bi-Weekly	$805.30	25.1	$222,604	$728
Weekly	$402.65	25.1	$222,350	$982
Bi-Weekly Rapid	$872.41	21.4	$185,889	$37,443
Weekly Rapid	$436.21	21.4	$185,477	$37,855

You can see from this illustration how dramatic your savings will be! Savings that can help you achieve your goal to retire early!

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