The secrets we are about to reveal you in the article could literally change your financial life in making you save thousands of dollars! Is it possible to shorten the amortization term of a 35-years home mortgage loan at 20 or even 10 or 15 years, often without paying more every year? Yes!
OK. You just signed a home mortgage loan and the term is long, very long… This could be a big benefit for you! It is not because your mortgage has an amortization of 35 years that you must repay it in 35 years. What makes the difference is the way you will make your payments throughout the term of the mortgage loan.
Almost all banks give you more ways to repay your home. For example, you can pay amounts in addition to minimum payments. You can also increase your monthly payment. Most banks let you increase your monthly payments by 20% without penalty.
But the most interesting way to repay faster is probably payments on the equity of your home. In many cases, you can pay up to 15% of initial capital each year!
What is interesting with this method is that every time you make an additional payment, you decrease your amortization and you pay less interest (which is calculated on capital). This way, you can create your own accelerated payments program!
Let’s take an example. Imagine you decide to buy a house and you need a $200,000 home mortgage loan. Payments over 25 years will cost you $1209 per month with an interest rate of 5.4%. But over 35 years, your monthly payments will be of $1053. Imagine you are able to pay the amount for 25 years but you choose the 35-year term.
You decide to save the differential amount (1209 – 1053 = 156) to pay it directly on capital every year ($1872). If you do it every year, you will repay your home mortgage loan in less than 20 years and you will have never paid more than if you took a 25 years term.
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