Hello Ginger the short answer to your question is YES for sure. That being said there are a few things to remember. If you have debts currently that are at a higher interest rate than your mortgage you should pay those off first. The higher the interest rate the higher priority to pay it off. It makes sense that each month it is costing you more to carry a debt with a higher interest rate than one with a lower interest rate. Once these are taken care of then your mortgage should be next priority. A mortgage at 5% interest rate paid off over 30 years will cost you about double the original starting balance in interest payments. That is something the banks just don`t tell you. If they did most people would wait till they had more down payment to minimize the overall costs. Any money you put towards your mortgage will go to principal and each extra payment will reduce the time it will take you to pay off your mortgage. Imagine eventually not having a mortgage payment due each month.... Then you can start putting that money to good use, like living or saving for retirement. I hope this answers your question. I would be happy to answer any questions for you or any reader on this or another topic, give me a call any time: Abraham Niyazi - Mortgage Agent - Lic#M08010640 - Centum One FInancial Corp - Lic 10758. Cell: 416-993-4082 Toll Free: 1-866-728-3708 x 115 www.centum.ca/abraham_niyazi/ I deal with 25 Banks/lenders and can do mortgages across Canada except Quebec.

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This question is for all those folks that don't know too much about mortgage loans. is it true that the best time to pay extra on mortgage loans are at the beginning years of a mortgage loan? that way an individual can beat the bank on the interest. please give me your thoughts on this. thank you.

the beginning of the 12month period....if your 1st payment was june....then you need to pay in may over every year. if you pay earlier...then you can cut more time off the term. you can also do biweekly payments

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I have over a $500,00 loan for a condo in los angeles 5.375% interest rate - place is worth about $670,000 and i have about $145,000 in equity - other than this loan i am debt free - should i make extra mortgage payments or take advantage of the tax advantage and invest the extra $$ in the market? - i plan on staying in my place over 5 years. thanks

A little of both. Diversify. Best of luck!

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When paying my mortgage i would like to pay extra but not sure if i should apply it to the principle or the interest. i assume the principle.

why dont you just put the money in a savings account and let it earn interest, lets say you are paying an extra $200 a month to your mortgage for the next 5 years, your payment wont go down as I assume your value is going down now if you are in the US, so you are paying the bank $200 a month you can not access, not lets say 5 years down the line you need money, the only way to get it out of your house is to pay around 3-5,000 dollars in closing costs, so you now paid the bank $12,000 down on your mortgage and have to pay up to $5,000 to get it out, HOWEVER if you use my idea, you now have $12,000++++ in the bank that has earned interest, and you can access it at any time, do this for a few years and you will have money in bank to payoff mortgage if you so choose to. BUT YES you pay down principle not interest, which doesnt affect your monthly payment it only will shorten term of the loan

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I have a one bedroom maisonette and find that i'm getting on okay. when i get married there will be two of us here with double the salary. is it better to move somehwere larger and get a larger mortgage or is it better to pay extra on this mortgage and try and clear some of it quickly before moving on?

I can tell you as a Long Term Single Parent, that it is FAR BETTER and was FAR BETTER for me to pay off and pay down the existing mortgage on the home I purchased rather than move on up to another property -- because ... I kept this home through out all the years I was on Active Duty, rented it out, and when I finally secured my Military Retirement -- NOW .. the home was within a few payments of being paid off in full - a REAL BLESSING considering that I had two young children to raise and DID Raise them to adulthood in the home. FAR, FAR better to repurpose your space, or if you can -- to build on and/or remodel to obtain additional room -- and that is ONLY of you have the existing property space to do so. IF NOT -- paying down the mortgage faster allows you to not just gain greater equity in your existing property, but also to have that as a Leverage in when you DO need to either move on up or remodel.

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I want to pay my 30 year mortgage off sooner by paying an extra payment or more each year. would this be wise? i've been doing research and while i thought this would be a good idea, i've read it may not be best. i basically want to pay a 30 year mortgage off in 17 years.

It depends on what else you are doing with that money, what your interest rate is and what your tax bracket is. If you are spending that money, then it's better to put it on the mortgage. If it is sitting in a savings account earning nothing, then it's better to put on the mortgage (unless you don't have a cash reserve). If you have a 5 1/2% mortgage, you are in a 28% tax bracket and you would otherwise have that money invested in the stock market which historically earns an average of 10%, then you'd be better off NOT putting it on the mortgage.

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Why do i need to pay extra amount when i pay off my mortgage ? i wanna pay off a refinance mortgage. i see i have principle amount 142k on line, but when i request a payoff statement, it comes out to be 146k . how come ? i asked what is that for , and i was told it is for some kind of fees ... which i have no idea about. any financial expert know is it normal ? ?

The previous poster is right. It's a prepayment penalty. To have gotten your mortgage in the first place, you would have had to sign a contract with a prepayment clause and this would have stated whatever the penalty was, either in a percentage or dollar amount. They charge this because you're paying the money back sooner and therefore not paying all of the interest they were expecting. Remember, interest is what you pay to use someone else's money for a specified period of time!

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I have heard that paying a one time yearly extra mortgage payment will eliminate my mortgage quicker than if i spread the same amount on prinicpal over 12 months? does it matter which way i do it so long as by the end of the year i make the equivalent of one extra payment?

Well, the earlier you make the extra payment, the earlier your mortgage will be paid off. So if you decide to make an extra payment in 2009 and you have to chose between making it over the months in 2009 and at the end of 2009, the former will shorten your mortgage more than the latter.

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I have a regular principle+interest 30 year mortgage. if i were to pay extra principle, would my monthly payment then be lowered?

No, the extra money you put down get taken off at the end of the loan, which can save you thousands of dollars. If you pay bi weekly instead of monthly, this in itself will save you thousands over the course of the loan. If your mortgage payment is lets say 500 a month, this will come of the end and it will subtract 2-3 payments from the length of the loan. The last few payments on a loan are mostly principle.

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If i have a little extra money each month, which is a better long term investment? paying extra toward the principal of my mortgage or put it in my 401k?

Generically: Assuming you have emergency savings and no outstanding debt other than your mortgage (those other things come first) -- First, 401(k) to 12% of income or max contribution, with ever is less. Second, pay 30 year mortgage as if it was a 15 year mortgage (calculations available online). Third, max 401(k) contribution. Fourth, max ROTH / Traditional IRA contributions Five, build a hopes & dreams fund. Sixth, pay off mortgage. ** Qualification ** mortgages under $100k have very little value in the big (financial) scheme of things. Unless the actual interest rate (not nominal) is exceptionally low (less than 6%), you can ignore my complicated "formula" and just pay off the mortgage, esp. if it helps you "sleep at night" and you plan to stay there for another 10 years or more.

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We put $450 a month in savings (only $100 of that to a 457) and already pay bi-weekly payments on our mortgage ... but i want to get out of debt! which is better? stay how we are or pay more on the mortgage? we did a 15 year mortgage, have been paying bi-weekly since 2003 we when did the loan. we owe about $65,000 but we also have an equity line balance at $96k. should i pay extra on that instead of saving?

Pay more on your the debt you owe the least on. Keep the $100/month in the 457. If you are using credit cards now use what you used to put in savings toward whatever you normally use the credit cards for. If you don't have credit cards with a balance and the only debt you have is this mortgage and your 96K equity line, pay more on the mortgage. I can send you a spreadsheet that allows you to play with the numbers to see how much sooner you would pay off your mortgage. If you don't save at least a year's worth of payment I wouldn't bother.