Two Tips to Reduce Your Mortgage CostsPosted by Nick Niesen on October 29th, 2010 Here are two tips to help you reduce your mortgage costs and by doing so get closer to owning the entire home you live in. PAY FORTNIGHTLY Paying fortnightly instead of monthly is a very smart and very simple way to carve a decent sized hole in your mortgage costs. The mathematics are pretty straight forward; As we Looking at an average sized mortgage of $200,000 over 25 years at 7.5%. The monthly repayment is $1478, and the total interest bill will be $243,400. If you pay half the monthly repayment KEEP YOUR REPAYMENTS AS HIGH AS YOU CAN, EVEN WHEN RATES DROP When floating interest rates change, the lender will adjust your monthly repayment to reflect That $200,000 mortgage at 7.5% will cost $1478 per month to repay over 25 years. Let's assume that five years into the term, the interest rate drops to 6.5%. In order to still have the mortgage repaid over 25 years, the lender will drop the monthly repayment to $1369. But if you kept the repayment at $1478, the term would drop to 18 years and you would save $22,860 in interest. Like it? Share it!More by this author |