Merry Christmas everyone!
To me Christmas is spending time with family. Having a young family, has opened my eyes to things I could not imagine myself doing. Taking time to get ready for trips is now sightly longer with additional "stuff" to bring. But at the end it is the enjoyment of the family and memories that cannot be replaced.
Having a mortgage is like having a family. In that there are responsibilities in maintaining some routine. If we are able to inject additional funds into the mortgage, we would be paying less interest for the duration of our mortgage. In other words, the more we put into the mortgage, above what is recommended, the faster and cheaper our mortgage could be.
Regular repayments, and knowing our limits will ensure that we are on track in paying off our mortgage. Even when interest rate changes, you can still check your repayments against what your bank is proposing. I am in favor of payment more off your mortgage however if the funds are tight, use the following formula to determine your monthly repayment. Lenders would like us to pay our loans off early as it reduces risk for them. I have personally experience this with a lender.
To check their calculation, using excel;
=PMT(i/12,N,-PV,FV)
where
i = the current interest rate applicable
N = the number of outstanding months remaining on your loan. If you are unsure, you can have a higher number here, so a 30 year loan, the N = (30 * 12) = 360
PV = is the outstanding balance of your loan
FV = is your future value of your loan, which for a mortgage is generally 0
NOTE: the above calculation would have to be run every time there is an interest rate change to an amortization loan. The key to this calculation is that at the term end of your loan, your outstanding balance must be 0.
Have blessed Christmas!
