A mortgage is probably the largest loan that you will ever take out in our life, and traditionally it will hang around your neck for anything up to 25 years.  Imagine if there was a way that you could reduce your total mortgage payments and reduce the term of your mortgage, and still only pay the same amount of money.  Impossible? No, read on…..

When setting up a mortgage, traditionally you would probably be expected to pay monthly, say one payment when the mortgage is agreed and one each month on the same date.  The revised process works best for interest and capital repayment mortgages  which are the more popular nowadays.  The traditional monthly payment you make will reduce your interest payments on an ongoing basis, and the amount of capital outstanding is also being reduced each month.  But why do you pay once a month? Why not pay every two weeks? Would it make a difference?

It could potentially make a massive difference, and all because of the fact that you will be paying down the capital quicker, which in turn reduces your interest payments.  Lets say at the start of next month you pay your full mortgage payment, and then two weeks later you pay half again, then half again two weeks later, and so on and so no.

By doing so, each two weekly payment is reducing your capital quicker than one payment every month, thus by reducing your capital amount quicker, your interest payments will then be reduced.  If you payment figure is set, then as your interest payments reduce, your capital payment increases and the rate at which you payoff your capital gets quicker and quicker. 

This type of simple payment plan can take literally years off your mortgage term, and save you ten of thousands of pounds into the bargain.  Just by changing you payment dates, and paying half early and half on the scheduled date, it can take a  real weight off your mind.  Ask you adviser next time you are discussing your mortgage, and watch their face!