What strategy would YOU recommend to pay off a mortgage early? Check out the Pay Off Mortgage Early Template here ➡ www.gabrielletalksmoney.com/product-page/pay-off-mortgage-early-template
Hi Gabrielle I just found your site today and I’m so glad I did. You have some very helpful content. Thank you 🙏. I bought your pay off your mortgage template today and couple questions. I pay my mortgage biweekly already and have an increased biweekly payment arranged with the bank already. How do I enter my information to give me correct answers being biweekly already ? Also I entered my monthly expense as the increased payment amount I already have set up with my bank. Ie $563 increase to $700 so I said $1400 a month with an amortization of 14.9 years because that is what it is with the increased payment I have set up as autopay with my bank. Is this giving me correct numbers how I’ve entered things ? Appreciate any direction you can offer
We refied (11% to 8%) and then as our salaries increased started making additional payments that got applied 100% to the principal. Paid off the 30-year mortgage in a little over 11 years.
I put $287k of lump sum towards my mortgage and also increased the monthly payment by $150. By doing this, I shortened the payment period by 20 years 9 months and saved $700k in interest payments.
I am doing all 3 strategies! $1400 extra monthly lumpsum, regular weekly payments. and just recently increased my weekly amount by extra 18 dollars lol.
SO every month on a certain day you pay $1400 on the principal? How much do you pay weekly? Just curious because I want to do this with my home and my car loan.
I was a stay at Home mom with no money in my IRA or any savings of my own, which was scary at 53 years of age. Three years ago I got a part time job and save everything I make. After 3 years, I am 56 yo and have put $9,000 in an IRA and $40,000 in my portfolio with CFA, Dorian j Townsend. Since the goal of getting a job was to invest for retirement and NOT up my lifestyle, I was able to scale this quickly to $150,000. If I can do this in a year, anyone can.
We applied for mortgage on 2012 (5 yr. term with a 25yr. amortization period). Since we don’t like debts, I worked hard (hubby can’t due to medical condition). We made sacrifices, no eating out, no vacation… just plain work and savings… we paid our mortgage in 2021 (and it was the BEST feeling, FREEDOM!) We increased our bi-weekly mortgage payment and we paid the maximum amount allowed annually (20%) to pay towards the principal. And now, we have been free of debts. We are doing an addition space in our house and paying it cash😊.
I explained to my 8 year-old daughter the difference between the avg yearly appreciation of our home versus the cost of the money loaned to us. Based on 30 year avg, we would lose money if interest is above 5-6% and gain money if it is below. Most years, you will earn money on real estate. Having a mortgage isn't a bad thing as long as you are making good decisions with your money. Having a home repossessed or being house poor is a lot worse. Gabrielle has lots of great ideas on those risks and how to avoid those financial pitfalls. First National has an option of upping pymt by 15%: we have probably used this option the most.
So keen! My wife and I are 50k additional so far over 2 years and updated it again to 1k a week fortnightly recurring and the calculator says around 7-8 years until $0 😮 gives me so much motivation to keep smashing it out
This is such a great video - very informative and to the point. I have pretty decent financial literacy, but this really showcased the scenarios well. We've been saving up for lump sum payments with bonuses and tax refunds, but the extra monthly payment towards the principal is definitely something we can afford right now.
Nice video! I was paying more into principal every month when my loan was at 4.25% but once I got it refinanced to 2.75% I pulled back most of that cash and put it into total market ETFs.
My thoughts about mortgage 1. The loaner helps you get a house when you don't have the cash. So you have the chance to ride with property appreciation. So it is a good thing. 2. Following the contract (payment terms) is the most economical way to pay off your mortgage if you manage your money correctly. The reason is that there will incur fees if you modify the payment term and inflation will make the payment worth less over time. 3. When mortgage rate decreased dramatically you have a chance to refinance the loan. But the rate difference does not equal to your savings. So you need to calculate carefully. 4. Focus more on the networth other than only the debt.
the key point is "focusing on if you can afford the payment". That was how lenders and salesman want us to think. They tried to hide the true cost from you and how it could trap you. Next time you are dealing with a salesman don't let them forcing you on focusing on if you can afford a payment, ask them about the true cost.
Started overpaying my principal when the 1st was due in early summer 21, knocked years off the life of the mortgage in almost 3 1/2 years also every COLA we add another $10 a month to the payment, This Jan 25, we will be paying $50 more on a $126 a month principal, we have been paying far more towards in principal than interest for awhile now.
This is a very analytical accountant take, which I appreciate. However sometimes the more advantageous scenario isn't to pay off your mortgage early; Its to take the payments that you would have otherwise used to pay down principal and invest it into an ETF like VOO or SPY and within 25 years that money over the time would essentially be much higher than your starting balance.
It deppends on how tou feel about it, for me also an Accountant the best feeling was also to payoff my house and get rid of the those interest payments. Now we can focus on investing and saving and traveling.
This was a great, very clear video. I’ve been doing the 2 payments but I will add one or your other options. I wish young kids will watch this video before buying a property. Thank you very much
Hi Gabrielle... Thanks for the video. Very informative. You have highlighted the HUGH amount of interest that we've been paying for our mortgage loan. This will really cause us to consider ways to pay less interest to the bank so that we can use that amount for better use. Thanks for sharing and your explanation is really clear and easy to understand for people who have little financial knowledge.
I have been investing in QQQ for 22 years with an annual rate of return of 14.4%. The 8k I put in 2002 is today worth 150k. Using your example, imagine not paying down the 5% mortgage faster and instead putting that towards an investment like the QQQ. You would think you saved a few hundred thousand dollars in interest, but you would actually give up millions in stocks appreciation.
@@ricardobenjamin2756 Peace of mind depends on your confidence in your ability to invest well during good and bad times, which in turn comes from experience and skills. I have seen multiple crashes in my 24y investing journey and when investing in stocks, I use Technical Analysis to detect them early and hedge my portfolio and then when they start turning around, as great opportunities to remove the hedges and go long aggressively. I also have rental properties that generate consistent cashflow so I am not worried about becoming a forced seller at the bottom of a crash because of a job loss etc. So I am not only not scared of crashes and corrections, but I look forward to them. But if you are not confident in your investing skills, having low risk appetite is a good thing and paying your house down is the right thing for you.
Great video I don’t think people realize what they’re paying and how much they’re paying over the long run. I personally am doing a biweekly payment with an additional monthly payment for principal.. ❤.
Accelerated bi - weekly payments are key. Shaves off 7-8 years of payments. I'll be mortgage free in a few years. Double up payments before the yearly anniversary of your mortgage also helps.
Great video, thank you! In your video, you mention to make sure that any extra payment we make (monthly or bi-weekly) goes directly to your principal and not be counted as some principal and some interest. How do you ensure that’s the case?
Purchase (2) modest investment rentals. (I own 4.) It is a part-time hands-on business and a ticket to a comfortable retirement if you are willing to deal with the headaches. I buy clean low-mileage cars in cash and I carry no balance on credit cards. I "retired" 10 years ago and my portfolio is worth more now (inflation considered). I will not outlive my resources if I live to be 100.
Well done! I could have used the spreadsheet model you created and ended up creating my own years ago, but I like how you added graphing and round functions in Excel. I am going to share this with others who could leverage this advice to plan their mortgage payments via scenarios models. Also second the comment about the weekly option, and perhaps how "accelerated weekly" and "accelerated bi-weekly" options impacts the overall interest paid over time. Another lens for you - is the ability to project a bit further based on 5, 10, 15 year mortgage renewal intervals, I think in some cases people don't model what an interest change impact might look like. Thank you for creating this video!
Hi Gabrielle, I downloaded the Mortgage early template. My monthly mortgage includes an escrow. Do I enter that separately or should I include that in the Calculated Fixed Monthly Payment column? Thanks
It really depends on your interest rates and if you can get better return from your extra money. Then you can decide paying off your mortgage early really making sense.
How do you make payments only towards the principal? Do you have to speak to the bank representative or just make extra payments & it automatically goes towards the principal? Thank you also for the video! ❤
If you make a lump sum payment you can consider recasting your mortgage at the same time. Recasting will reduce the interest and principle of future payments. However, you should continue to pay the original payment plus additional principle to pay off your loan early.
@@akunamatata4266 When recasting you make a large lump sum payment. Then mortgage company can recalculate your remaining installments as if you made a larger down payment from the beginning of your loan.
Like someone else said, it depends on your mortgage interest rate and whether you can get better return investing elsewhere. It’s not always the best idea across the board. We had a 3% interest mortgage that we paid off in 8 years. Value of the house went up 60% during that time. In hindsight we probably would have made more money investing elsewhere bc we had a low interest rate and stocks were doing so well during that time. And we can’t buy rental properties or stocks now bc they are so high.
true. and sacrifice more like. Live like dogs, work like slaves and have no free lives to enjoy or grow. The market itself is 200% overpriced. letting the price fall would solve all miseries. but .. they dont talk about reducing the price, increasing the supply. they just advises ..for eating less, wearing less, working more, spending time with family less.
Well it’s not as simple as that. There a reason why so many people live pay check to pay check and are happy to just pay their mortgage for 30 years. Lack of knowledge on how much the banks are gaining. Knowing this stuff put things in perspective and allow us to make better informed decisions.
I just upped my weekly payments 10% and I'm ready to make a $40,000 principal prepayment... quick math shows it cutting $66000 of interest off my total, minus any applicable prepayment penalties of course.
Option 4 - make double payments and then have a one time lump sum payment of 200k after you sell your older house (if applicable) results in about paying the mortgage of in 6 ish years
Great video! Thanks for breaking down the scenarios and even showing that there's no one true strategy to pay down your mortgage quicker. I'll definitely use this to determine when I own a certain % of my home and when I can stop paying private mortgage insurance. Definitely subscribing for more of this type of content :)
@Lennoxrenol great information and video What if I can show you another way to achieve the same goal in less time using no additional income or payments
I hardly leave comments on videos but I really wanted to leave one on this one because it’s incredibly informative and I love that you can purchase the templates as well. It’s such a huge time saver to not have to build these templates from scratch but great also to be able to learn all the things I should consider when I do my own analysis using Gabrielle’s template. I also really loved her mortgage vs invest video!! Thank you so much Gabrielle! I hope you keep making these kinds of videos!
instead of paying off mortgage early. Why not invest extra cash on investments l(e.g. stocks) with higher than 4-5% ( interest rate) return? i don't mean using Smith Manuveur but simply invest and reinvest
It really depends on your interest rate. I can write a check to pay my mortgage off today. But I won't. I have a 2.2% APR. I will be a fool if I pay off my mortgage early. My money is easily making 10% return. When you do pay off your house, your money is tie down in nonliquid asset. It is not making any return unless you rent it out. it is not easy to access it. If you have a low interest rate, it is better to NOT pay it off and invest in the market.
@@ScottJ_Moses I have calculated the risk. Getting up and driving to work has a risk. There are over a thousand people in my state die of traffic crash every year. Do we avoid driving? of course not. It is a calculated risk. As long as, you understand that and able to manage the risk. There is no reason to be afraid of it.
Because a mortgage’s interest is front loaded would it be wise to double pay the first 1/3. Pay 50% extra on the 2/3 and regular payments on the last third? Giving me more capital in invest in years 10-30 in a 30 year mortgage?
Great template . I agree with the previous comments. Would be great to get additional simulations to see the effects if we had 2 or all the 3 strategies . Maybe a future video ?
When it comes to a lump sum payment, do you know why it is limited per year? That makes no sense lol Is it because the bank wants to keep the money coming in as revenue/income?
It's to ensure they profit from the mandatory interest paid, more predictable for the lender. Usually it's a 5 year term, and you can pay up to 20% per year of that term but those numbers vary from lender to lender.
so glad to fine your channel. I Subscribed!! I am 55yr old. and pay my mortgae $520,000 for 15years 1.78% interest, and I pay $100extra pay for principal. is there any other option I can pay off earlier?
Gabrielle, I hear from people with a lot of money that they would choose to pay a mortgage over buying a house with cash(one payment) so that they can get a tax write-off. Can you compare the benefits of paying off a mortgage early versus getting a tax write-off? I'm in the US.
Hi Gabrielle, love your video about finances. Can you do a video on how you choose Accounting as a career and how you study for the courses. Currently am an accounting study and not sure if I’m into audits or tax. Advice is appreciated.
Regardless of interest rate, with a 30 year loan you can expect inflation to rise a certain amount each year. After two decades your weekly salary should be enough to make the payment (instead of two weeks of salary during the beginning of the loan). This reduces the sting of looking at the interest amount of a 30 year loan.
You missed an important conflict, subtract the annual inflation rate. This is probably more people who pay their own mortgage, vs investors whose renters pay the mortgage.
I would say I don’t know how I find you on UA-cam, but I know better. My husband and I have been in prayer so that we get our credit scores up and our credit record in great shape so that we can purchase our forever home. It was no one but God that led me to *Pecuniary backdoors* . I thank God for this wisdom. Bless you.
Great video! If I am making extra payments every month, do I have to let the lender know ? Or the interests charged is automatically recalculated? (I had to ask for recast in order to reduce the monthly payment )
don't have a house yet, but looking soon and plan to go for a 15 year mortgage instead to really save on interest and then I;ll apply one of these strategies too so hopefully I can be done in more like 10 years cause then my kids will be in college and I'd love to help them
Thank you *Strategic techies* so much for you’re advice as my credit score is 771 and wanting to increase it as much as possible as l’m just trying to look out for my future. I’ve subbed you.
My brother, you needed this! I already had ideas of raising my score. But I just found more ways because of this. *Pecuniary backdoors* are such a blessing, keep going frl!
If you took that lump sum of $20k and put it in a HYSA account then pulled $1666,00 a month to put on your mortgage you would end up better off correct?
Your strategy is good for a solid middle class person but using the extra funds for an investment home that generates positive cash flow from tenants is the way to go. You can put bunk beds and put college students in a dorm style set up making more total but making it very affordable for students at the same time
As an investor I will never choose to pay off my mortgage. Mortgage is the best way for average person to borrow money at low interest rate. Even at 5%, compare to last 10 years of SPY ETF, which had an annualized 13.3% return rate. Let along we are in an cycle toward cutting rates lower, thus lower mortgage rate and better SPY return coming up. The $$$ you used to pay off mortgage will earn more in the stock market.
Agreed and she doesn't even think from an investment standpoint. All else being equal, if the additional payments to the mortgage can be invested and earning an annualized risk-adjusted return that is higher than the mortgage rates for the holding period, then why pay it off earlier? Those funds can earn more than the mortgage interests saved.
I’m closing in on my retirement and I’d like to move from Minnesota to a warmer climate, but the prices on homes are stupidly ridiculous and Mortgage prices has been skyrocketing on a roll(currently over 7%) do I just invest my spare cash into stock and wait for a housing crash or should I go ahead to buy a home anyways?
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Considering the present situation, diversifying by shifting investments from real estate to financial markets or gold is recommended, despite potential future home price drops. Given prevailing mortgage rates and economic uncertainty, this move is prudent, particularly due to stricter mortgage regulations. Seeking advice from a knowledgeable independent financial advisor is advisable for those seeking guidance.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
@@joshbarney114 I appreciate the implementation of ideas and strategies that result to unmeasurable progress. Being heavily liquid, I'd rather not reinvent the wheel, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
Finding financial advisors like Marisa Breton Dollard who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Does this make sense with a lower 2.5% interest rate loan? Wouldn’t I make more investing this vs the amount I save in interest? Is it straight forward as knowing that I can expect 4.5% in HYSA or 8% from the SP500 if I invested the $200/mo in either of those options?
Numbers are there, but imagine losing your job or having a tragic life event. If you do this and lose 2 lbs every week. But somehow I just see a bunch of fat people.
If S&P 500 averaging 8% growth per year (this year already 20%), and your house appreciates by 5% per year, then your asset growths faster than your mortgage. So if you want to downsize when you retire, your home will be worth more than double. If your house appreciates, then you can leverage it to buy another house and rent out one of the houses. So long story short is to discuss with your financial advisor. It isn't always wise to pay off your mortgage.
There are plenty of reasons why you may want to put less or more. This also depends on where you live as fees and other things may be different than in Canada where she and I live. But if you are talking about a minimum you should put down in terms of saving on interest and fees, in Canada , if you put 20% down you can avoid paying for default insurance. If you have less than 20% down, this insurance costs around 2% to 4%. This is tired based on the percent you put down. The minimum I recommend is 10%. This is when the default insurance fee starts to decrease.
What strategy would YOU recommend to pay off a mortgage early?
Check out the Pay Off Mortgage Early Template here ➡ www.gabrielletalksmoney.com/product-page/pay-off-mortgage-early-template
I want to purchase this, just checking if this spreadsheet comes as a google template or excel? Thanks
Hi Gabrielle I just found your site today and I’m so glad I did. You have some very helpful content. Thank you 🙏. I bought your pay off your mortgage template today and couple questions. I pay my mortgage biweekly already and have an increased biweekly payment arranged with the bank already. How do I enter my information to give me correct answers being biweekly already ? Also I entered my monthly expense as the increased payment amount I already have set up with my bank. Ie $563 increase to $700 so I said $1400 a month with an amortization of 14.9 years because that is what it is with the increased payment I have set up as autopay with my bank. Is this giving me correct numbers how I’ve entered things ? Appreciate any direction you can offer
Nah, not gonna pay my 4% interest mortgage early when the sp500 returns a historical average of 8-10%.
@@freefree1664there are free calculators out there.
We refied (11% to 8%) and then as our salaries increased started making additional payments that got applied 100% to the principal. Paid off the 30-year mortgage in a little over 11 years.
I put $287k of lump sum towards my mortgage and also increased the monthly payment by $150. By doing this, I shortened the payment period by 20 years 9 months and saved $700k in interest payments.
I am doing all 3 strategies! $1400 extra monthly lumpsum, regular weekly payments. and just recently increased my weekly amount by extra 18 dollars lol.
For each 18 dollars, it's less interest paid! Way to go!
SO every month on a certain day you pay $1400 on the principal? How much do you pay weekly? Just curious because I want to do this with my home and my car loan.
@@kimberlyhenninger6346 1400 on 1st of every month. and i do 548 weekly as my regular accelerated payments.
@ckshq48 great information and video
What if I can show you another way to achieve the same goal in less time using no additional income or payments
I was a stay at Home mom with no money in my IRA or any savings of my own, which was scary at 53 years of age. Three years ago I got a part time job and save everything I make. After 3 years, I am 56 yo and have put $9,000 in an IRA and $40,000 in my portfolio with CFA, Dorian j Townsend. Since the goal of getting a job was to invest for retirement and NOT up my lifestyle, I was able to scale this quickly to $150,000. If I can do this in a year, anyone can.
We applied for mortgage on 2012 (5 yr. term with a 25yr. amortization period). Since we don’t like debts, I worked hard (hubby can’t due to medical condition). We made sacrifices, no eating out, no vacation… just plain work and savings… we paid our mortgage in 2021 (and it was the BEST feeling, FREEDOM!) We increased our bi-weekly mortgage payment and we paid the maximum amount allowed annually (20%) to pay towards the principal. And now, we have been free of debts. We are doing an addition space in our house and paying it cash😊.
I explained to my 8 year-old daughter the difference between the avg yearly appreciation of our home versus the cost of the money loaned to us. Based on 30 year avg, we would lose money if interest is above 5-6% and gain money if it is below. Most years, you will earn money on real estate.
Having a mortgage isn't a bad thing as long as you are making good decisions with your money. Having a home repossessed or being house poor is a lot worse.
Gabrielle has lots of great ideas on those risks and how to avoid those financial pitfalls.
First National has an option of upping pymt by 15%: we have probably used this option the most.
So keen! My wife and I are 50k additional so far over 2 years and updated it again to 1k a week fortnightly recurring and the calculator says around 7-8 years until $0 😮 gives me so much motivation to keep smashing it out
This is such a great video - very informative and to the point. I have pretty decent financial literacy, but this really showcased the scenarios well. We've been saving up for lump sum payments with bonuses and tax refunds, but the extra monthly payment towards the principal is definitely something we can afford right now.
Nice video! I was paying more into principal every month when my loan was at 4.25% but once I got it refinanced to 2.75% I pulled back most of that cash and put it into total market ETFs.
The bank let you refinance like that without a “reinvesting”?
@@AW-gj4ji No reinvesting. Just normal refinance and invested the money I earmarked for extra principal payments because the rate was so low.
My thoughts about mortgage
1. The loaner helps you get a house when you don't have the cash. So you have the chance to ride with property appreciation. So it is a good thing.
2. Following the contract (payment terms) is the most economical way to pay off your mortgage if you manage your money correctly. The reason is that there will incur fees if you modify the payment term and inflation will make the payment worth less over time.
3. When mortgage rate decreased dramatically you have a chance to refinance the loan. But the rate difference does not equal to your savings. So you need to calculate carefully.
4. Focus more on the networth other than only the debt.
I wished you had shown the synergistic effects of using 2 strategies to see what it would look like. Still a fantastic and great video overall!
There are many calculators online that can do this for you.
This is super important during the beginning of your mortage.
the key point is "focusing on if you can afford the payment". That was how lenders and salesman want us to think. They tried to hide the true cost from you and how it could trap you. Next time you are dealing with a salesman don't let them forcing you on focusing on if you can afford a payment, ask them about the true cost.
Started overpaying my principal when the 1st was due in early summer 21, knocked years off the life of the mortgage in almost 3 1/2 years also every COLA we add another $10 a month to the payment, This Jan 25, we will be paying $50 more on a $126 a month principal, we have been paying far more towards in principal than interest for awhile now.
This is a very analytical accountant take, which I appreciate. However sometimes the more advantageous scenario isn't to pay off your mortgage early; Its to take the payments that you would have otherwise used to pay down principal and invest it into an ETF like VOO or SPY and within 25 years that money over the time would essentially be much higher than your starting balance.
It deppends on how tou feel about it, for me also an Accountant the best feeling was also to payoff my house and get rid of the those interest payments. Now we can focus on investing and saving and traveling.
I hate to give free money to the crooked banks so it’s better to pay off early and also have a piece of mind.
I see your point, but there’s immense value in the peace of mind that comes with knowing your home is fully paid off.
This was a great, very clear video. I’ve been doing the 2 payments but I will add one or your other options. I wish young kids will watch this video before buying a property. Thank you very much
Awesome video just bought my house and have been making extra payments to the principal thanks
Hi Gabrielle... Thanks for the video. Very informative. You have highlighted the HUGH amount of interest that we've been paying for our mortgage loan. This will really cause us to consider ways to pay less interest to the bank so that we can use that amount for better use. Thanks for sharing and your explanation is really clear and easy to understand for people who have little financial knowledge.
I have been investing in QQQ for 22 years with an annual rate of return of 14.4%. The 8k I put in 2002 is today worth 150k. Using your example, imagine not paying down the 5% mortgage faster and instead putting that towards an investment like the QQQ. You would think you saved a few hundred thousand dollars in interest, but you would actually give up millions in stocks appreciation.
What’s qqq
Imagine doing that and having your mortgage paid off 😮
True. But then there is a risk element there that your investment DOESN’T pay off.
Each to their own, based on their own risk tolerance.
True but what about peace of mind.
You can lose that money Tom
Now what, with a paid off house that’s your leverage 😮
@@ricardobenjamin2756 Peace of mind depends on your confidence in your ability to invest well during good and bad times, which in turn comes from experience and skills. I have seen multiple crashes in my 24y investing journey and when investing in stocks, I use Technical Analysis to detect them early and hedge my portfolio and then when they start turning around, as great opportunities to remove the hedges and go long aggressively. I also have rental properties that generate consistent cashflow so I am not worried about becoming a forced seller at the bottom of a crash because of a job loss etc. So I am not only not scared of crashes and corrections, but I look forward to them.
But if you are not confident in your investing skills, having low risk appetite is a good thing and paying your house down is the right thing for you.
Great video I don’t think people realize what they’re paying and how much they’re paying over the long run. I personally am doing a biweekly payment with an additional monthly payment for principal.. ❤.
Im currently paying weekly pricipal payements towards the mortgage . It helps so much .
I can’t believe sometimes you can’t pay more then they would like you too or you get a penalty that’s insane to me!
Accelerated bi - weekly payments are key. Shaves off 7-8 years of payments. I'll be mortgage free in a few years. Double up payments before the yearly anniversary of your mortgage also helps.
What i got from this is, it's a good start to set up biweekly payments.
Great video, thank you! In your video, you mention to make sure that any extra payment we make (monthly or bi-weekly) goes directly to your principal and not be counted as some principal and some interest. How do you ensure that’s the case?
I don't know how you pay, but on my mortgage company's internet portal you can elect to put extra money towards the principal.
Purchase (2) modest investment rentals. (I own 4.) It is a part-time hands-on business and a ticket to a comfortable retirement if you are willing to deal with the headaches. I buy clean low-mileage cars in cash and I carry no balance on credit cards. I "retired" 10 years ago and my portfolio is worth more now (inflation considered). I will not outlive my resources if I live to be 100.
Well done! I could have used the spreadsheet model you created and ended up creating my own years ago, but I like how you added graphing and round functions in Excel. I am going to share this with others who could leverage this advice to plan their mortgage payments via scenarios models. Also second the comment about the weekly option, and perhaps how "accelerated weekly" and "accelerated bi-weekly" options impacts the overall interest paid over time. Another lens for you - is the ability to project a bit further based on 5, 10, 15 year mortgage renewal intervals, I think in some cases people don't model what an interest change impact might look like. Thank you for creating this video!
damn! adding additional payments "$200" will help a lot! thanks for the knowledge.
What do you think about taking an interest only HELOC (from my your home) into the principle of the loan to speed up paying off your mortgage?
Hi Gabrielle, I downloaded the Mortgage early template. My monthly mortgage includes an escrow. Do I enter that separately or should I include that in the Calculated Fixed Monthly Payment column? Thanks
It really depends on your interest rates and if you can get better return from your extra money. Then you can decide paying off your mortgage early really making sense.
Can you elaborate?
For 90% of people paying off the house will always be the best option. Peace of mind and mortgage free stress is priceless
How do you make payments only towards the principal? Do you have to speak to the bank representative or just make extra payments & it automatically goes towards the principal?
Thank you also for the video! ❤
Love this info! I thought lump sum was better...in my situation additional monthly payments to principal are better! Thanks!
If you make a lump sum payment you can consider recasting your mortgage at the same time. Recasting will reduce the interest and principle of future payments. However, you should continue to pay the original payment plus additional principle to pay off your loan early.
What is recasting ?
@@akunamatata4266 When recasting you make a large lump sum payment. Then mortgage company can recalculate your remaining installments as if you made a larger down payment from the beginning of your loan.
Like someone else said, it depends on your mortgage interest rate and whether you can get better return investing elsewhere. It’s not always the best idea across the board. We had a 3% interest mortgage that we paid off in 8 years. Value of the house went up 60% during that time. In hindsight we probably would have made more money investing elsewhere bc we had a low interest rate and stocks were doing so well during that time. And we can’t buy rental properties or stocks now bc they are so high.
You can buy rental properties with unpopular methods. How much do y'all have to invest?😊
The secret no one wants you to know how to pay off mortgage early: SEND MORE MONEY! 😂
😂😂😂😂😂😂 right?!
true. and sacrifice more like. Live like dogs, work like slaves and have no free lives to enjoy or grow. The market itself is 200% overpriced. letting the price fall would solve all miseries. but .. they dont talk about reducing the price, increasing the supply. they just advises ..for eating less, wearing less, working more, spending time with family less.
Well it’s not as simple as that. There a reason why so many people live pay check to pay check and are happy to just pay their mortgage for 30 years.
Lack of knowledge on how much the banks are gaining. Knowing this stuff put things in perspective and allow us to make better informed decisions.
Hi, is there a link to the excel file please??
By the way, I totally loved your video, a huge thank you x
I just upped my weekly payments 10% and I'm ready to make a $40,000 principal prepayment... quick math shows it cutting $66000 of interest off my total, minus any applicable prepayment penalties of course.
Option 4 - make double payments and then have a one time lump sum payment of 200k after you sell your older house (if applicable) results in about paying the mortgage of in 6 ish years
Great video! Thanks for breaking down the scenarios and even showing that there's no one true strategy to pay down your mortgage quicker. I'll definitely use this to determine when I own a certain % of my home and when I can stop paying private mortgage insurance.
Definitely subscribing for more of this type of content :)
@Lennoxrenol great information and video
What if I can show you another way to achieve the same goal in less time using no additional income or payments
I hardly leave comments on videos but I really wanted to leave one on this one because it’s incredibly informative and I love that you can purchase the templates as well. It’s such a huge time saver to not have to build these templates from scratch but great also to be able to learn all the things I should consider when I do my own analysis using Gabrielle’s template. I also really loved her mortgage vs invest video!! Thank you so much Gabrielle! I hope you keep making these kinds of videos!
glad you found it helpful!
instead of paying off mortgage early. Why not invest extra cash on investments l(e.g. stocks) with higher than 4-5% ( interest rate) return? i don't mean using Smith Manuveur but simply invest and reinvest
It really depends on your interest rate. I can write a check to pay my mortgage off today. But I won't. I have a 2.2% APR. I will be a fool if I pay off my mortgage early. My money is easily making 10% return. When you do pay off your house, your money is tie down in nonliquid asset. It is not making any return unless you rent it out. it is not easy to access it. If you have a low interest rate, it is better to NOT pay it off and invest in the market.
@@ScottJ_Moses I have calculated the risk. Getting up and driving to work has a risk. There are over a thousand people in my state die of traffic crash every year. Do we avoid driving? of course not. It is a calculated risk. As long as, you understand that and able to manage the risk. There is no reason to be afraid of it.
Lucky you 😊
awesome video and very well crafted spreadsheet!
Misleading on case #2, you keep the same payment like the #1 after 20,000, then you pay off faster.
Because a mortgage’s interest is front loaded would it be wise to double pay the first 1/3. Pay 50% extra on the 2/3 and regular payments on the last third?
Giving me more capital in invest in years 10-30 in a 30 year mortgage?
We are on track to pay our house off 2o yrs instead of 20. Which at the moment we have saved like 20k.
How much did you buy your house for?
of course!!!! I am chocked!!!!
Great template . I agree with the previous comments. Would be great to get additional simulations to see the effects if we had 2 or all the 3 strategies . Maybe a future video ?
When it comes to a lump sum payment, do you know why it is limited per year? That makes no sense lol Is it because the bank wants to keep the money coming in as revenue/income?
It's to ensure they profit from the mandatory interest paid, more predictable for the lender. Usually it's a 5 year term, and you can pay up to 20% per year of that term but those numbers vary from lender to lender.
The slower you pay it off, the more interest they make long term. That's why.
Great video. Thanks for posting. 💯💪🏾
so glad to fine your channel. I Subscribed!!
I am 55yr old. and pay my mortgae $520,000 for 15years 1.78% interest, and I pay $100extra pay for principal. is there any other option I can pay off earlier?
I love this video. It’s such a huge help.
Gabrielle, I hear from people with a lot of money that they would choose to pay a mortgage over buying a house with cash(one payment) so that they can get a tax write-off. Can you compare the benefits of paying off a mortgage early versus getting a tax write-off? I'm in the US.
Great video! Thank you
Hi Gabrielle, love your video about finances. Can you do a video on how you choose Accounting as a career and how you study for the courses. Currently am an accounting study and not sure if I’m into audits or tax. Advice is appreciated.
Im like confused which one to pay. I always pay extra $100 on interest than principal. As escrows continues to rise not sure if Im doing it correctly.
What about when you factor in the opportunity cost of not putting that extra mortgage payment to work in the stock market?
This was really good thank you for sharing the breakdown.
so insightful!
Regardless of interest rate, with a 30 year loan you can expect inflation to rise a certain amount each year. After two decades your weekly salary should be enough to make the payment (instead of two weeks of salary during the beginning of the loan). This reduces the sting of looking at the interest amount of a 30 year loan.
Love it! Thank you 🙏 ❤
You missed an important conflict, subtract the annual inflation rate. This is probably more people who pay their own mortgage, vs investors whose renters pay the mortgage.
The main ingredients are discipline and will power. Interest saved (tax free) is better than interest earned.
When making a lumpsum payment, should I put I put it toward the principal or escrow?
Great video.
Loved this video and I will definitely be using your template.
I would say I don’t know how I find you on UA-cam, but I know better. My husband and I have been in prayer so that we get our credit scores up and our credit record in great shape so that we can purchase our forever home. It was no one but God that led me to *Pecuniary backdoors* . I thank God for this wisdom. Bless you.
*I’m glad it works for me and i am sure it will works for you as well*
Great video! If I am making extra payments every month, do I have to let the lender know ? Or the interests charged is automatically recalculated? (I had to ask for recast in order to reduce the monthly payment )
This is true. I finished my mortgage in 5.5 years! After that, my savings is increasing (like its in steroids) monthly 👍
Thank you!
I used accelerated banking to pay off my 30 year mortgage in 6.7 years and didnt have to make any additional payments
Thank you for sharing 😍😍❤️🔥 new subscriber 😇
love youe video. Thank you.
Hi, I love the way that you explain the formula, but I would like to see if you can share the Excel spreadsheet I do not know how to do it
don't have a house yet, but looking soon and plan to go for a 15 year mortgage instead to really save on interest and then I;ll apply one of these strategies too so hopefully I can be done in more like 10 years cause then my kids will be in college and I'd love to help them
Thank you *Strategic techies* so much for you’re advice as my credit score is 771 and wanting to increase it as much as possible as l’m just trying to look out for my future. I’ve subbed you.
My brother, you needed this! I already had ideas of raising my score. But I just found more ways because of this. *Pecuniary backdoors* are such a blessing, keep going frl!
If you took that lump sum of $20k and put it in a HYSA account then pulled $1666,00 a month to put on your mortgage you would end up better off correct?
Your strategy is good for a solid middle class person but using the extra funds for an investment home that generates positive cash flow from tenants is the way to go. You can put bunk beds and put college students in a dorm style set up making more total but making it very affordable for students at the same time
Appreciate it if you could share the excel copy.
Shocking is an understatement. I almost fainted!
could you please add weekly payments also in this scenario
Do you guys in America & Canada have offset accounts?
Nobody seems to address property tax increases and needing to plan for higher payments.
FANTASTIC VIDEO THANKS SO MUCH
As an investor I will never choose to pay off my mortgage. Mortgage is the best way for average person to borrow money at low interest rate. Even at 5%, compare to last 10 years of SPY ETF, which had an annualized 13.3% return rate. Let along we are in an cycle toward cutting rates lower, thus lower mortgage rate and better SPY return coming up. The $$$ you used to pay off mortgage will earn more in the stock market.
Agreed and she doesn't even think from an investment standpoint. All else being equal, if the additional payments to the mortgage can be invested and earning an annualized risk-adjusted return that is higher than the mortgage rates for the holding period, then why pay it off earlier? Those funds can earn more than the mortgage interests saved.
Can I have a copy of the Excel sheet, please?
Whats the best option if we have a 750,000 principle, at 3.2%, but do not plan to live out the 30 year life of the loan?
if I am getting more interest on a saver account than my mortgage account interest, should I still pay off my principal ?
I’m closing in on my retirement and I’d like to move from Minnesota to a warmer climate, but the prices on homes are stupidly ridiculous and Mortgage prices has been skyrocketing on a roll(currently over 7%) do I just invest my spare cash into stock and wait for a housing crash or should I go ahead to buy a home anyways?
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Considering the present situation, diversifying by shifting investments from real estate to financial markets or gold is recommended, despite potential future home price drops. Given prevailing mortgage rates and economic uncertainty, this move is prudent, particularly due to stricter mortgage regulations. Seeking advice from a knowledgeable independent financial advisor is advisable for those seeking guidance.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
@@joshbarney114 I appreciate the implementation of ideas and strategies that result to unmeasurable progress. Being heavily liquid, I'd rather not reinvent the wheel, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
Finding financial advisors like Marisa Breton Dollard who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Would appreciate if you can share or dm a copy of the excel.
I could only 2 out of the 3 strategies, unfortunately here in the UK bi-weekly payments are not common.
Thank you. I'm shocked
Would you mind to share the spreadsheet 😊
What about a video on how to
Leave canada with all your money
There is no video like that, because it's impossible...
Does this make sense with a lower 2.5% interest rate loan? Wouldn’t I make more investing this vs the amount I save in interest? Is it straight forward as knowing that I can expect 4.5% in HYSA or 8% from the SP500 if I invested the $200/mo in either of those options?
Numbers are there, but imagine losing your job or having a tragic life event. If you do this and lose 2 lbs every week. But somehow I just see a bunch of fat people.
Love this infornation!
Thank you
So the strategy is, pay as much as you can as often as you can
Sooooo pay more. Got it. Great advice.
Would you recommend paying off the mortgage if the rate is less than 3 percent?
If S&P 500 averaging 8% growth per year (this year already 20%), and your house appreciates by 5% per year, then your asset growths faster than your mortgage. So if you want to downsize when you retire, your home will be worth more than double.
If your house appreciates, then you can leverage it to buy another house and rent out one of the houses.
So long story short is to discuss with your financial advisor. It isn't always wise to pay off your mortgage.
Is there a suggested amount that ppl put towards down payment? Should we put down as much as we can or just the minimum required?
That depends on how long you plan to live in it.
There are plenty of reasons why you may want to put less or more. This also depends on where you live as fees and other things may be different than in Canada where she and I live.
But if you are talking about a minimum you should put down in terms of saving on interest and fees, in Canada , if you put 20% down you can avoid paying for default insurance. If you have less than 20% down, this insurance costs around 2% to 4%. This is tired based on the percent you put down. The minimum I recommend is 10%. This is when the default insurance fee starts to decrease.
id this Canada???
@10:25 it is $1,074 not 1704!!