Real Estate

Double mortgage payment - roll call

  • Last Updated:
  • Dec 18th, 2018 9:03 pm

Poll: When possible, do you do double mortgage payments?

  • Total votes: 32. You have voted on this poll.
Yes
 
16
50%
No
 
16
50%
[OP]
Deal Addict
Nov 10, 2018
1807 posts
1721 upvotes

Double mortgage payment - roll call

As RFDers, our focus is to minimize our costs where possible, and one very large cost that all of us with mortgages face is the interest associated with it. As some of you know, one has the option on doubling up on mortgage payments with this second payment going directly towards the principal (in full). This also means that if we lose our jobs, we can completely not have to pay any mortgage payments up to the # of double mortgage payments one has already made during their term. Due to the magical effects of compounding, if one does double mortgage payments at each and every opportunity, a mortgage amortized over 25 years would be paid off in 10.

I'm starting this thread to bring awareness to this and also to see how many of you take advantage of this option. One also has the option to start and stop double payments, basically, at anytime.

Please vote!

(and if you don't, why is this? Cashflow or because of some other investment strategy?)
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
15 replies
Deal Fanatic
Dec 11, 2008
9349 posts
1099 upvotes
We do not do double up payments, we do lump sum payments to remain flexible without having to call and change payment schedules.

Mathematically, if our mortgage is $1500/month, we are doing approx 380% of our mortgage payments on top of regular payment. ie. $1500 a month = $18,000 a year in payments. We do annually approx $68,000 in extra payments on top of mortgage payments towards mortgage.

We have a 20/20 rule so we do almost 20% a year in lump sum payments twice a year. We went from 30 year mortgage to 5 year and hope to not have to renew ever.
[OP]
Deal Addict
Nov 10, 2018
1807 posts
1721 upvotes
speedyforme wrote:
Dec 18th, 2018 4:42 pm
We do not do double up payments, we do lump sum payments to remain flexible without having to call and change payment schedules.

Mathematically, if our mortgage is $1500/month, we are doing approx 380% of our mortgage payments on top of regular payment. ie. $1500 a month = $18,000 a year in payments. We do annually approx $68,000 in extra payments on top of mortgage payments towards mortgage.

We have a 20/20 rule so we do almost 20% a year in lump sum payments twice a year. We went from 30 year mortgage to 5 year and hope to not have to renew ever.
Interesting, but the problem with your two prepayment strategies is that if you are unable to make the regular mortgage payments then you default.

Like many my annual bonus is once a year, so once I have money laying around I just call up my bank to begin double mortgage payments until that funny money is exhausted at which point I tell the bank to cease double payments. The process is painless and the upside is that should I find myself without employment then I can pause mortgage payments altogether.
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
Deal Fanatic
Dec 11, 2008
9349 posts
1099 upvotes
angryaudifanatic wrote:
Dec 18th, 2018 4:45 pm
Interesting, but the problem with your two prepayment strategies is that if you are unable to make the regular mortgage payments then you default.

Like many my annual bonus is once a year, so once I have money laying around I just call up my bank to begin double mortgage payments until that funny money is exhausted at which point I tell the bank to cease double payments. The process is painless and the upside is that should I find myself without employment then I can pause mortgage payments altogether.
Well I suspect the strategy isn't too far off. I mean we are clearly saving money to accumulate that $68k a year. Meaning if we did lose our job, we just don't do the lump sum payment.

having said that though, I am sure the double payment adds additional safety on the no payment, but with our situation, we live off of one income so making the regular payment + expenses is not a risk for us unless we are both jobless at the same time.
Sr. Member
May 9, 2017
978 posts
982 upvotes
speedyforme wrote:
Dec 18th, 2018 4:42 pm
We do not do double up payments, we do lump sum payments to remain flexible without having to call and change payment schedules.

Mathematically, if our mortgage is $1500/month, we are doing approx 380% of our mortgage payments on top of regular payment. ie. $1500 a month = $18,000 a year in payments. We do annually approx $68,000 in extra payments on top of mortgage payments towards mortgage.

We have a 20/20 rule so we do almost 20% a year in lump sum payments twice a year. We went from 30 year mortgage to 5 year and hope to not have to renew ever.
That's roughly what we did too. Year end bonuses are a wonderful thing!

Mortgages suck. Get rid of them as fast as you can.
Deal Fanatic
Dec 11, 2008
9349 posts
1099 upvotes
NotRobot wrote:
Dec 18th, 2018 4:53 pm
That's roughly what we did too. Year end bonuses are a wonderful thing!

Mortgages suck. Get rid of them as fast as you can.
Was talking to my mom and she asked if my sister should put her bonus in her RRSP. I said what is she going to do with it? Invest and my mom said she doesn't think my sister invests in the RRSP.

I nearly died.

I said she either contributes to her RRSP and invest or take her damn bonus and pay down the house. Do something!
Banned
Feb 23, 2009
1670 posts
1495 upvotes
Oshawa
NotRobot wrote:
Dec 18th, 2018 4:53 pm
That's roughly what we did too. Year end bonuses are a wonderful thing!

Mortgages suck. Get rid of them as fast as you can.
While in general terms debt is bad, low interest mortgages can and have been great.
Being a slave to your mortgage can be restrictive.
You should be contributing the max every year to RRSPs and RESPs where the benefits outweigh paying off cheap debt.
Sr. Member
May 9, 2017
978 posts
982 upvotes
speedyforme wrote:
Dec 18th, 2018 4:55 pm
Was talking to my mom and she asked if my sister should put her bonus in her RRSP. I said what is she going to do with it? Invest and my mom said she doesn't think my sister invests in the RRSP.

I nearly died.

I said she either contributes to her RRSP and invest or take her damn bonus and pay down the house. Do something!
She should do both. Invest in RRSP, take refund and pay down mortgage.
Deal Fanatic
Dec 11, 2008
9349 posts
1099 upvotes
NotRobot wrote:
Dec 18th, 2018 5:15 pm
She should do both. Invest in RRSP, take refund and pay down mortgage.
Ha one step at a time :P
Deal Fanatic
Feb 22, 2011
5823 posts
5501 upvotes
Toronto
I was going to but I am fixed at 2.44% so there is no point.

My Tangerine savings account is giving me 3% for a year and can DCA into other investments that average higher returns.
Sr. Member
May 9, 2017
978 posts
982 upvotes
pkrash wrote:
Dec 18th, 2018 5:14 pm
While in general terms debt is bad, low interest mortgages can and have been great.
Being a slave to your mortgage can be restrictive.
You should be contributing the max every year to RRSPs and RESPs where the benefits outweigh paying off cheap debt.
Agreed. I always did RRSP when I had room to get refund and always took the free government money to max out RESPs.
I personally had enough money tied to the market so other than the two you mentioned, mortgage was always next.
Of course these days you have TFSAs too.
Member
User avatar
Nov 1, 2001
472 posts
114 upvotes
Toronto
angryaudifanatic wrote:
Dec 18th, 2018 3:49 pm
As RFDers, our focus is to minimize our costs where possible, and one very large cost that all of us with mortgages face is the interest associated with it. As some of you know, one has the option on doubling up on mortgage payments with this second payment going directly towards the principal (in full). This also means that if we lose our jobs, we can completely not have to pay any mortgage payments up to the # of double mortgage payments one has already made during their term. Due to the magical effects of compounding, if one does double mortgage payments at each and every opportunity, a mortgage amortized over 25 years would be paid off in 10.

I'm starting this thread to bring awareness to this and also to see how many of you take advantage of this option. One also has the option to start and stop double payments, basically, at anytime.

Please vote!

(and if you don't, why is this? Cashflow or because of some other investment strategy?)
is this only available with open mortgage?
[OP]
Deal Addict
Nov 10, 2018
1807 posts
1721 upvotes
ranjeet2000 wrote:
Dec 18th, 2018 8:10 pm
is this only available with open mortgage?
This is available to my closed mortgage, and all closed mortgages that I am aware of.
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
Member
User avatar
Nov 1, 2001
472 posts
114 upvotes
Toronto
angryaudifanatic wrote:
Dec 18th, 2018 8:11 pm
This is available to my closed mortgage, and all closed mortgages that I am aware of.
ok. i always wanted to make prepayments, but worried that if rates go up, i may not be able to handle the payments so i've been very conservative about my payments. but if i can make double payments, and those previous payments can buffer me,t hat would be good. I can't seem to find this online for my bank.
Member
User avatar
Nov 1, 2001
472 posts
114 upvotes
Toronto
NotRobot wrote:
Dec 18th, 2018 4:53 pm
That's roughly what we did too. Year end bonuses are a wonderful thing!

Mortgages suck. Get rid of them as fast as you can.
i'm envious of that extra payment you can afford to make.

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