Have you heard about mortgage cycling? Maybe you've seen the ads for books on this "secret technique" for paying off your mortgage sooner.
Mortgage cycling is dressed up as a "new" system, and of course there are many little tricks to doing this most effectively.
The safest way of "mortgage cycling" is to just put large lump sums of money towards your mortgage loan every few months to a year.
Don't assume you can't come up with SOME extra money, at least each year.
You can also pay off large chunks of principle by using your annual tax refund, insurance settlements that are not otherwise allocated, and any cash gifts or prizes you may receive.
How much sooner you can pay off your mortgage depends on how much extra you pay and when.
Suppose you have a $160,000 30-year mortgage at a 7% annual interest rate. Regular monthly payments would be $1064.40.
If you did this each month, you would cut the time to pay off your loan in half. The principle part of the payment would be growing with each payment, so the extra payment would be a little more each month (around $137 by the end of the first year), but hopefully over the years your income will rise enough to afford that.
Other ways to pay off extra principle need to be evaluated carefully. You could, for example, put a few thousand of your savings towards the loan now and save perhaps tens of thousands in interest over the years.
To keep it simple, set aside extra money every month and apply it to the loan.
Steve Gillman has invested in real estate for years.
I like the idea of doubling the principle amount every month to make the 30 year a 15 year.
But inflation adjusted and based on ones career growth, one may actually be able to pay that principle in 10 years.
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