How Do I Play?

It's actually very simple, but requires a bit of care.

  1. Run your mortgage numbers through the Mortgage Payout Calculator. Carefully, pick an amount of additional principal that you can cover while meeting all other obligations and still saving some money.

  2. Apply the additional principal to your mortgage payments. Care is required here because many lending institutions will treat additional paid-in funds as "advance interest payments" by default. This means that in the absence of instructions from you, they will assume that any additional funds should pay interest and not principal. The benefits of advance interest payments are not clear to me, but the benefit of paying additional principal is apparent.

    To assure that your additional principal is credited correctly, look at your mortgage payment slip. There should be a place to fill in amounts against both "Additional Interest" and "Additional Principal". Fill in the amount of the additional funds under "Additional Principal". You payment slip had no such entries, write it on the payment slip. If you pay without a payment slip, enclose a note informing the bank of your wishes to apply additional funds as "Additional Principal".

One more thing! Make sure and check your yearly mortgage statement to insure that additional funds you pay are credited correctly. Humans do make mistakes.

Disclaimer. Any and all opinions expressed on this page are solely those of the author. The author accepts no responsibility for the accuracy of data provided on this web site, nor does the author accept any responsibility for the use and /or misuse of information provided on this web site. It is the full and sole responsibility of the user to determine whether and/or how best to use the information provided within their own circumstances, and it is the full and sole responsibility of the user to accept any and all benefits and/or consquences of their actions. Please see my Privacy Policy.

Copyright 2001-2009, Tim Sharpe. You are free to use this information for personal, non-commerical use without restriction. All rights reserved for commerical, organizational, or government use. Questions or comments to Flames to /dev/nul.

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