Save Mortgage Interest and Pay Your Mortgage Off Earlier

Most people imagine that once you have a mortgage you’re stuck with it for the next 30 years. What they don’t realise is that by using a couple of simple ways to make a few extra payments, it’s possible to cut years of the duration of your mortgage whilst saving thousands of Ringgit in interest charges.

Here are a couple of simple strategies you can use:

Round up to the nearest hundred

This plan is easy to take advantage of and the result is often a saving you wouldn’t have thought possible.

As an example, let’s use a mortgage of RM 400,000.00 over 30 years at 4.5% interest. The monthly re-payments would be somewhere around RM 2,026.00 per month.

Now let’s see what would happen if you rounded that payment to the RM 100.00 by increasing your payment by RM 74.00 each month. You’re now paying RM 2,100.00 per month instead of your original sum.

What will happen is that you’ll save over RM 27,000.00 in interest payments spread over the life of your mortgage! Impressed? Of course you are. But there’s more. Not only will you save money but you’ll be slashing the total length of your mortgage by 2.1 years!

Start Out With a 15 Years Mortgage

One of the best things you can do, as long as you’re able to afford it, is to start with a 15-year mortgage instead of 30. Believe it or not, the extra expense isn’t usually that great but the money you save will be.

We’ll use the same RM 100,000.00 mortgage that we calculated with in the above example, only this time we’ll take it at 8% over 15 years. Your monthly re-payments would be RM 955.00, just RM 200.00 more per month than on a 30-year mortgage.

Over the life of the mortgage you’ll be paying RM 72,017.00 in interest compared to RM 164,160.00 on the 30-year example.

Worth considering? Yes, we think so, too.