Making the same payments all the time decreases the principal amount of the mortgage, even when the mortgage rates have fallen. Do not look at the short term effect of the mortgage rates but at your long term situation.

 

7. You just got a promotion and your income has increased. Why not raise the payments you make?

 

Instead of getting an expensive weekend getaway package because of that promotion, why not spend the money well by putting it into the mortgage payments? Short term leisure versus long term vision? You decide. Raising the payments you make reduces the interest and the principal amounts, thus the mortgage can be finished sooner than you expected.

 

8. If you can, double up the payments.

 

When you can, double up the mortgage payments. You can have the "skip" option of not paying when it is absolutely necessary. In this way, you won't still be behind your mortgage payments.

 

9. The effect of prepayments

 

Making prepayments reduces the principal amount of the mortgage. How do you determine that? If your mortgage interest rate is 5.0%, for every $100 prepayment you make on the principal, you are able to save $5.00 in interest annually. Compute that for a thousand or $10,000. Isn't that great savings?

 

10. Principal payments are not tax-deductible

 

Therefore, your mortgage principal payments are made on after tax income. Imagine the dwindling effect on your disposable income. If you can feel the heat, then it is time to do something about it.

 

Thus, the bottom line in enabling you to pay off the mortgage quicker is to get the principal down as soon as possible and as much as possible. Not only will this reduce interest payments but it also reduces your mortgage paying terms.

 

Long term effects of this strategy? You can enjoy more leisure activities once you have all that excess disposable income after the mortgage payments cease.

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