It stands to reason that the easiest way to pay off any debt is to put more money toward the amount you still owe. The more you pay, the faster the debt will clear. Right?

Right. The problem there is – not many people have huge amounts of left-over available cash to pour into a mortgage each month. Would it make a difference, though, to simply pay a few extra dollars a month on top of the regular payment?

Can your spare change really make a difference to your mortgage? Can spending a couple of minutes going over your original mortgage contract make a difference?

Believe it or not – every cent counts.

Before we begin, we need a base loan amount to use as an example.

Let’s say you have a 30-year mortgage of $120,000 with an interest rate of 7.5%, your minimum monthly payment is: $839.06 per month.

If you paid precisely that amount each month, it would take exactly 360 months (or exactly 30 years) to repay your mortgage. The scary part is NOT the amount of time it takes.

What is really scary is that 360 payments at $839.06 per month = $302,061.60

Now THAT’S scary! It would actually cost you more than $300,000 and take you 30 years to pay off a $120,000 mortgage!

Let’s look at some examples.

Example One:

What if your bank charges a monthly “account” fee on TOP of your regular payment? $5 per month does not sound like a lot of money, but that small change sure does add up quickly. Paying banking fees and charges can eat into the amount you could be paying off your mortgage balance.

$5 per month over the term of a 30 year loan is $1,800. If you put that $5 onto your mortgage balance instead of paying it in banking fees, you could potentially cut your loan term down to 29.3 years and save $4,798 in interest payments.

There are plenty of ways to reduce – or sometimes even cut out – banking fees without the hassle and expense of refinancing. More on those in another article.

Example Two:

Your minimum payment is $839.06 every month. This is what the bank expect you to pay. What would happen if you rounded up the amount to a nice, even figure?

Let’s say $850 per month. That’s only $10.94 per month extra – that’s 0.36 cents per day! Small change, isn’t it?

If you paid that extra small change into your mortgage each month, you could pay off your mortgage in 28.6 years and save $10,104 in interest payments.

Ten thousand dollars is NOT small change any longer!! That’s a substantial saving.

Let’s combine example one with example two: You choose to pay an extra $10.94 on each monthly payment. You also decide to add the $5 per month you save on banking fees to that payment. Now you’re paying $15.94 per month EXTRA (making a total payment of $855 per month)

You could pay off your mortgage in 28 years and save $14,277 in interest payments. And we’re still talking only petty cash!

Example Three:

What if you rounded your minimum payment up to the nearest hundred? Instead of paying $839.06 per month, you pay $900 per month. That’s $60.94 more per month than the minimum payment.

You could see your mortgage paid off in 24 years – that’s 6 years off the total loan term! On top of that, you would save yourself $43,243 in interest payments.

Now we’re starting to talk about serious savings…

You can try some of these examples yourself with any good mortgage calculator. You’ll be surprised at how much petty change can save you.