How Do I Play?

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".

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