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North of London | I think what you are talking about is paying off EXTRA on the mortgage.
If your amortized payment was $1000 part of that goes to interest and part goes to principle.
The amounts change with interest being the real big amount at the first of a long term debt and principle being site small.
This reverses towards the end and you last payment will be mostly principle.
That is why you have a chart or an annual statement to tell you how much is interest expense and deductible and how much is principle and not tax deductible, at least in Canada. Even interest on houses is not deductible in Canada.
So they advantage of making an EXTRA payment is every $ of the extra money is applied to the principle.
Now if you continue to make the same payment every year (that is the key to it) you will be paying more principle and less interest than the amortization table shows because you have less interest on the lower principle.
Continue that for the rest of your mortgage period and a few EXTRA $ paid off in the first few years will shorten the time it takes to pay off your mortgage by several years in lots of cases.
In farming paying some EXTRA on the mortgage can be a cushion some year when things do not go well because it is easy to talk the lender into giving you a break on payments for that year since you are ahead of the original agreement.
Some mortgages do not allow early pays or maybe only on anniversary dates or only certain anniversary dates. | |
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Forbearance on mortgage to pay off tractor
