Bi-weekly mortgage payments involve splitting your monthly payment into two smaller payments made every two weeks. Over the course of a year, this results in 26 half-payments, which equals 13 full payments—one more than you'd make with a standard monthly payment plan. This extra payment helps reduce the loan term by about 4.9 to 7 years on a 30-year mortgage, potentially saving you some interest.
However, the actual benefit might be less significant than expected. For ten months of the year, the bank simply holds your first half-payment until the second one arrives, meaning it doesn't immediately reduce your interest. Only in the two months with an extra payment does it directly reduce the principal, leading to savings. Unfortunately, banks often don't provide clear details on exactly how much interest you're saving with this method.
While bi-weekly payments can help you pay off your mortgage a bit faster, they may not be the most efficient strategy available. Exploring other methods that clearly show how much interest you're saving could provide better results and more control over your financial decisions.
Get a FREE Savings & Earnings Report! https://bit.ly/3QqmPx5 Watch & Subscribe to the PILL Method Youtube Channel! https://bit.ly/4aRITIy#Dondaniel#PILLmethod#InterestCancellation#PayOfYourMortgage3to5years#PayOffStudentLoansFaster#ABetterWayToEliminateDebt#OptimizedBudgeting#MortgageTips
Myra Rafael has a question. She said. I wanted to get your feedback on biweekly payments. Does it really help paying more toward the principal and save on the interest? That was a question. And then Myra second question was, do you know if there is a chart to see the savings? All right, listen, folks, here's what we're talking about. They're asking about a biweekly payment and here's how biweekly payments work. So the bottom line is this, a biweekly payment will save you somewhere between 4.9. Years and seven years on your mortgage, no more than seven years on a 30 year mortgage is not designed to do any more than that. OK, we're talking about in the pill method paying off. Your mortgage and your student loans and your credit cards and your car loans in about 7 to 9 years. Paying off everything in seven to nine years. A biweekly payment. We'll save you 7. And now you can pay your mortgage off in 23 years. Just your mortgage. So here's how it works folks. When you have a biweekly payment, when you make your payment on the 1st and on the 15th, 10 months out of the year, it saves you no money in interest. None 0. The bank holds your money until it receives a full payment when you pay on the 1st. The bank is holding your money. It holds your money until you pay again around the 15th, and then they apply the money to your mortgage as normal 10 months out of the year. There are two months out of the year where there's going to be 5 weeks, and in those two months you're going to be sending them a third payment in that month. So it's like a third half payment. So you're going to make a payment, 1/2 payment on the first, another half payment on the 15th, and another half payment about the 30th. OK, So is those two months out of the year that they take those two half payments and apply them it turns into 13 payments a year, 13 payments a year by doing a by weekly payment. So I can tell you this every client that becomes a pill method client. Turns off their biweekly payments. It's no longer needed. OK. The other thing is that while doing a biweekly payment, here's what you're not getting when you pay the bank extra. So let's say you're making that third payment in the month, all right? And so you make your payment in the first, the 15th and the 30th. The one that you make on the 30th, that's the one that saves you money, OK, that one. When you do that, does the bank ever send you a receipt saying thank you very much for this extra payment, Here's how much interest you just saved. And I know people who are out there saying, no, we've never gotten the receipt from the bank. Lisa, congratulations, Tiffany. But they don't tell you how much money you just saved by that extra payment. You know what's worse? We never even bothered to ask. Many of us are paying extra on credit cards, paying extra on car loans, rounding up our mortgage payments, putting extra on the mortgage. But we're not getting a receipt that says here is how much interest you saved. And not only that, we're not even asking how much interest. We say banking is the only industry. I know of where we give money and we don't know what we just bought. And we are conditioned to do that and feel OK about it. Giving somebody extra money and just trusting the fact that they're going to apply it correctly and we're going to save some interest, but we don't know how much. We don't know if we could have done better or worse. We're just leaving it up to chance and saying. Give you this money and we're hoping everything turns out OK without any empirical evidence at all. Wow. That's what's going on. That's what we're conditioned to do. We're here to turn that all around. You should know what every single penny in your budget, you should know what it's doing for you. And we're going to make sure that you know that I'm going to put something else on screen here. Here is an example of our program and how well it works. So this is the program that handles all of the math and tells you exactly what to do. To save the maximum amount of interest, this is John Rebecca Jones. Here's what they have. They've got $500 in their checking account, a little over $5000 in their savings account. Their mortgage is $200,000, OK, and the bank wants them to pay $235,000 in interest for that. And there's a $2000 Visa. All right, And here's the minimum payment. And they have a car loan, $25,000. So here's what's going on. They're going to be able to pay off. The $200,000 mortgage, the $25,000 car, and the $2000 Visa, and they're going to save $179,448 in interest. And because of that, they're going to be able to pay off all of this debt in 7.7 years without changing their budget and without sacrificing lifestyle. The program is going to tell them exactly what to do and when to do it to save the maximum amount of interest that's mathematically possible. For them. So there is a chart is this that we have it, the banks aren't giving it to you alright, but Don has some valuable information that can contribute to the quality of a person's life and it only cost you a few dollars. He's just his book. Why not get that? Is I'm going to go through the pill method myself with some of my investment properties. So I'm going to link up with Don and then I'm going to sit down with him, show him my investment portfolio and see how I can eliminate interest.
Adding extra payments toward your mortgage principal is a powerful strategy to reduce the total interest paid and shorten the loan term. When you make an additional payment toward the principal, especially early in the loan, it reduces the principal balance, which then lowers the base on which interest is calculated for the following month. This can lead to substantial interest savings over time, as less interest accrues each month, accelerating your progress toward becoming debt-free.
To take full advantage of this strategy, it’s essential to time your payments effectively. If, for example, you make your regular monthly mortgage payment in January, any extra payment you make before the first of February will go directly toward the principal balance. This extra payment can be applied on the same day as your regular payment or any other day before the beginning of the next month. Just ensure you specify it as a “principal-only” payment so it immediately reduces your loan balance rather than being held for a future payment.
For those looking to maximize the impact of extra payments, some financial tools or programs can help identify the optimal days to make additional payments. By carefully planning the timing of extra payments, you can reduce interest costs even further, ultimately paying off your mortgage more quickly and retaining more of your money for other financial goals.
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How Can Amortization Strategies Help You Shorten Your Mortgage?
Answers: https://lnkd.in/gffubSPS#MortgageManagement#Amortization#FinancialPlanning
Hey everyone! 👋 I wanted to pop in and chat about something that’s been on my mind lately: amortization reduction.
So, here's my situation: My bank finally resumed showing me how many months I have left on my mortgage! 🎉 This info had been MIA during the rate hikes, and I only got the update in a year-end letter. It's a huge relief to see my progress, especially after surviving those intense rate increases.
Last December, my mortgage term was sitting at a whopping 62 years and 9 months! 😱 Fast forward to now, I’m down to 35 years and 11 months. It feels good to see that reduction!
But here's the kicker: my payments don’t go down when interest rates drop. So, I'm gearing up for my renewal and planning to make some extra payments to keep that amortization reduction moving in the right direction. I suspect I'm not alone in this boat; many of us are trying to navigate through similar financial waters.
🔍 Let’s break this down: Why do we sometimes face these pain points?
Interest Rate Fluctuations: Rising rates...
Making extra principal payments on your mortgage each month can significantly alter the end date of your original amortization schedule. Normally, a 30-year mortgage involves 360 payments. By strategically paying extra towards the principal, you reduce the loan balance faster, leading to fewer payments and an earlier payoff date. This method involves applying small amounts at the right times to maximize interest savings, shortening the loan term without requiring a large amount of money.
Furthermore, making these extra payments positively impacts your credit score. Reducing your mortgage balance lowers your credit utilization ratio, a key factor in credit score calculations. Consistent, timely mortgage payments and reducing your principal balance demonstrate responsible debt management. This strategy significantly improved my own credit score, reaching over 800, which opened up more favorable financial opportunities for me and my family.
In summary, paying extra on your mortgage principal not only shortens your loan term and saves interest but also boosts your credit score. Focusing on lowering credit utilization and maintaining timely payments helps achieve financial goals without compromising your lifestyle, leading to greater financial freedom and stability.
Get a FREE Savings & Earnings Report! https://bit.ly/3QqmPx5 Watch & Subscribe to the PILL Method Youtube Channel! https://bit.ly/4aRITIy#Dondaniel#PILLmethod#InterestCancellation#PayOffYourMortgage3to5years#PayOffStudentLoansFaster#ABetterWayToEliminateDebt#OptimizedBudgeting#MortgageTips
Big changes are coming to the mortgage landscape, and it may just be what you're looking for!
Starting November 21st, the Office of the Superintendent of Financial Institutions (OSFI) is eliminating the Stress Test for uninsured mortgage switches.
As a reminder, the stress test was a rule put in for qualification that you had to qualify at 2% above your contract rate (or the benchmark rate - whatever was higher). As an example, if you had a 5% contact rate, you would have to qualify at least at 7%.
The new rules mean that, at renewal, if you want to switch your mortgage to another lender, you won't have to qualify with the stress test. This means, if your rate is 5%, you just need to qualify at 5%!
How can this benefit you?
1) Freedom to shop around
2) Potential Savings on interest rates
3) Increased competition from lenders
4) Easier qualification and less stress for you
The majority of mortgages will be renewing in the next 3 years, so this can be a huge sigh of relief for borrowers.
Hopefully, we can completely do away with all stress tests as a whole, in time, but this is a great step in the right direction for borrowers.
To discuss your options and see what type of rates you can get, get in touch with me!
#Mortgages#StressTest#InterestRates
Carl’s mortgage calculator, like many others, gives a basic idea of your mortgage payments but lacks detail on how to maximize savings. These calculators don’t tell you the optimal amount to pay, the best time to make payments, or which loan to target first. To truly minimize interest costs, you need an opportunity cost calculator.
Opportunity cost helps you understand the financial impact of your decisions by considering what you might gain or lose with each choice. For example, using a certain amount of money to pay off one loan might save less interest compared to using it elsewhere. This involves evaluating many variables and their combinations, which can be complex.
An opportunity cost calculator analyzes millions of possible combinations quickly, telling you the exact amount to pay, the best time to pay it, and which loan to target. This strategic approach helps you save the most interest and pay off your debt efficiently, offering a far more effective strategy than a basic mortgage calculator.
Get a FREE Savings & Earnings Report! https://bit.ly/3QqmPx5 Watch & Subscribe to the PILL Method Youtube Channel! https://bit.ly/4aRITIy#Dondaniel#PILLmethod#InterestCancellation#PayOffYourMortgage3to5years#PayOffStudentLoansFaster#ABetterWayToEliminateDebt#OptimizedBudgeting#MortgageAdvice
📰 extra extra read all about it 📰
Today we bring to the market a great innovation and addition to the pure retirement range. Introducing ISM on Heritage.
Have a read below and see how this amazing solution can add great client outcomes.
My favourites are:
🔵 Up to 1% discount on the rate depending on variant chosen
🔵Min 25% serviced with increases at 1% increments up to 100% - truely tailored!!!
🔵Freedom and flexibility to have payment holidays of up to 3months in a 12 month cycle.
🔵lump sum, drawdown and FA available
We all know life events can occur and having that freedom to have a payment break of up to three months and continue the discounts I believe offers a great benefit!!
Pick up the phone or go straight to all sourcing engines were LIVE right now!!
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For financial advisers only. 📣 BREAKING PRODUCT NEWS 📣 We’ve launched interest servicing on our Heritage lifetime mortgages, offering your clients an interest rate discount if they choose to make monthly payments of at least 25% of the monthly interest on their lifetime mortgage!
Applicants will benefit from a range of great features, including:
✔ Interest rates discounts of up to 1% depending on the product selected
✔ The ability to stop payments at any time
✔ Available on lumpsum and drawdown mortgages
✔ Up to 3 months’ payment holiday in every 12-month period from the completion anniversary
✔ The option to service the interest on cash releases and further advances
Discover interest servicing here: https://bit.ly/3BjKSsI
Book your place on our explainer webinar, taking place on October 2nd: https://bit.ly/4eC2Wg1
Get in touch with your regional Intermediary Sales representatives to learn more: https://bit.ly/3A2e7Lf#productupdate#productinnovation#financialplanning#retirementplanning#financialservices#equityrelease#lifetimemortgages#laterlifelending
In my most recent article, I talk about what you can do with your mortgage fund while you wait for mortgage rates to fall.
I go into the differences between high-yield checking accounts, high-yield savings accounts, and short-term CDs, what circumstances are good for each type of account, and what accounts probably aren't a good idea if you want to open a mortgage soon.
Read the full article on Business Insider: https://lnkd.in/eHSb9Xdv#PersonalFinance#Mortgages#BankAccounts
What to Consider as Fixed-Rate Terms End
With mortgage rates at historic lows a few years ago, many homeowners locked in their rates to protect their long-term finances. But now, as some come to the end of their fixed-rate terms, they might face higher rates ahead.
Here are some points to take into consideration:
Evaluate Current Rate Terms:
Assess your current mortgage terms, including the expiration date of any fixed-rate periods or introductory offers.
Stay Informed:
Keep a close eye on market trends and economic indicators that may impact mortgage rates in the near future.
Consult with Experts:
Seek guidance from mortgage brokers or financial advisors to explore your options and determine the best course of action.
Consider Long-Term Goals:
Reflect on your long-term financial goals and how different rate scenarios may align with your objectives.
Prepare for Potential Changes:
Anticipate potential changes in your monthly payments and budget accordingly to mitigate any financial strain.
Act Swiftly:
Once you've made an informed decision, take swift action to lock in a favourable interest rate before market conditions shift.
If you’re coming off a fixed rate and need some guidance on what may be the best step, feel free to reach out for a no obligation chat.
📞 0494 021 512
📧 Emmanual.Clironomos@aussie.com.au#MortgageRates#Homeownership#FinanceTips#FinancialAdvice#MortgageAdvice#HomeLoans#InterestRates#FinancialPlanning#PersonalFinance#MortgageBrokers#PropertyFinance#RealEstateFinance#FixedRate#VariableRate#Budgeting#FinancialGoals#EconomicTrends#MarketInsights#HomeBuying#FinancialLiteracy
Want to get pre-approved for a mortgage? Here's how to prepare:
Check Your Credit Score: Review your credit report for accuracy and work on improving your score if needed. A higher score can lead to better mortgage rates.
Gather Financial Documents: Collect your pay stubs, tax returns, bank statements, and other financial documents. Lenders will need these to assess your financial health.
Reduce Debt: Lowering your debt-to-income ratio makes you a more attractive borrower. Paying off credit cards and loans can improve your chances of approval.
Save for a Down Payment: A larger down payment can lead to better mortgage terms and lower monthly payments. Aim to save at least 20% of the home's price.
Get Pre-Approved Early: Starting the pre-approval process before house hunting ensures you know your budget and can act quickly when you find the right home.
Ready to get started? Let's connect! 📞💬
#MortgagePreApproval#HomeBuyingTips#RealEstateAdvice#DenverHomes#CentennialLiving#LittletonLife#BoulderRealEstate#GoldenCO#ParkerHomes#HighlandRanchLiving
🏠 Wondering about the impact of your credit score on buying a home?
Your credit score is crucial when applying for a mortgage—it influences both your ability to secure a loan and the interest rates you receive.
Let's look at an example:
On a $300,000 home loan, the difference between an 8% and a 6% interest rate can significantly alter your monthly payments.
You could end up paying several hundred dollars more each month.
Over the span of a 30-year loan, this can amount to an extra $100,000+ in interest payments alone!
While a strong credit score is important for securing a mortgage with favorable terms, it's just one aspect of financial wellness.
It's possible to maintain a high credit score while managing substantial debt levels.
Thus, while it's important, it doesn't necessarily equate to overall financial health.
For a healthier credit score, consider:
1️⃣ Using credit cards responsibly and paying off balances each month.
2️⃣ Tackling high-interest debts as a priority.
3️⃣ Consistently making payments on time and keeping your credit utilization low.
A good credit score is beneficial for obtaining better mortgage rates but should be balanced with other financial goals.
#MortgageTips#CreditScoreMatters#HomeLoanAdvice#FinancialWellness#RealEstateFinance#RitterHomeLoans#RitterMortgage#RelyOnRitter#PeopleFocusedLending#NMLS1436890#NMLS210106
Founder/CEO at The P.I.L.L. Method International, Author of The P.I.L.L. Method...A Better Way To Eliminate Debt!
3mo#MortgageAdvice #DebtFreeJourney #PersonalFinance #InterestSavings #HomeOwnership