February 2010 Mortgage Reduction Report

February is almost over and I thought we were not going to be able to hit our target for our mortgage prepayment this month.   That was until the bank made a big error.  I sent in a prepayment request for $500 and somehow $12,500 was taken from our account for a prepayment.  This caused a little grief as we were in overdraft for a day before using our line of credit to get us out of overdraft.

I am going to call the bank and ensure that all the money was put against our mortgage and see if they can figure out how that happened.  Although everyone makes mistakes I do not see how I would put $12,500 instead of $500 and I can’t see how the bank would either.  After we get stuff figured out we are likely just going to leave things as is.  The difference in the interest rates between the line of credit and our mortgage is minimul so the difference in the interest over the 3 months it will take to get the line of credit paid off is about $5 as compared to the mortgage. If the bank finds that they made an error and we find out that we have suffered any loss by going into overdraft I am confident that they will compensate us.

There is a big change in our interest saved this month.  I was playing with our mortgage numbers the other day and noticed that I had made an error when we first took our mortgage.  Before the first payment was even made we switched to accelerated bi-weekly payments rather than monthly.  I neglected to calculate the interest savings that we experienced when we switched to the accellerated bi-weekly payments.  Putting this into the equation I am extremely happy to say that we have saved $276K in interest costs combining the bi-weekly payments and our monthly extra mortgage payments.  This month’s bank error certainly helped.  That number simply astounds me.  We had an immediate savings of $97,552.90 when we switched to accelerated bi-weekly payments and it reduced our amortization period to 32 years.  Our additional prepayments have done the rest.

If you have not looked at what a couple of hundred extra dollars a month will save you over the life of your mortgage, you really should.

We did pass a couple of milestones due to the bank error.  Since we started our mortgage 19 months ago we have paid a total of $108,606.22.  We have also paid our original mortgage balance down by 27%.   Now we will be paying down the line of credit for three months.
After we got our error sorted out we decided no to utilize our line of credit to bring our mortgage balance down.  Our prepayments this month totaled $2000.  That combined with the additional $778 last month were are $1934 behind in our prepayment YTD.  We will see what we can do about that in the months to come.  The milestones we had reach have been reversed and we will have to wait a couple of months before reaching them.

January 2010 Mortgage Reduction Report

We have just sat down and made our final prepayment for the month of January.  I am happy to say that we were able to come up with $5,500 this month to put towards the mortgage.  That is $778 more than what is needed to meet our goal.  I changed our board and we have now saved $160,000 in interest on our mortgage.  That is simply incredible!

Febuary, March and April may be tight months and I an not anticipating being able to make extra mortgage payments.  I do want to hold off as we have a big bill coming in March, a vacation to pay for and I am anticipating a fairly hefty tax bill.  Such is life!

December 2009 Mortgage Reduction Report

2009 is pretty much behind us now and we can reflect on the past 12 months. Looking back I am impressed with the goal we have set to pay off our $316,000 mortgage in 5 years but wonder if we will be able to make it happen. Shoot for the stars and if you hit the moon you have still done very well.

Our additional payment in December was limited to $2,800. Although this is short of our $4,700 monthly goal it does bring our mortgage balance under $250K which is quite the accomplishment considering that we started at $316K in August 2008.

In 2009 we made a total of $71,675.86 in mortgage payments. There were bi-weekly payments of $760.61 totaling $19,775.86 and additional mortgage payments of $51,900.00. In 17 months of payments we have brought our original mortgage balance down 21%. If we compare this to our original amortization period of 40 years we have a projected savings of $150K in interest and a new amortization period of 21.4 years if we do not make any more additional payments. I am very impressed with our progress.

I look forward to 2010 although I know we will have challenges meeting our monthly goal of an additional $4,700 put down against the mortgage. There are areas in our financial lives that can be improved. We should be able to save some money by reducing our restaurant meals. I also be car pooling to and from work for a majority of 2010 and that should save me $100 a month.

We look forward to sharing our progress with you in 2010.

November 2009 Mortgage Reduction Report

November is almost behind us and we did not quite reach the goal of prepaying $4700 this month. We did manage to put down an additional $4000 which I am happy with. That leaves us $3400 short of our goal for the last three months.

This leads us into December and we are not expecting to make our goal of a $4700 mortgage prepayment. We have a higher than normal credit card bill as we rewarded ourselves last month with a new couch. A trip to Regina to visit my parents has also been factored into next month. The only goal for December is to go into the New Year with a mortgage balance under $250K. With a $2800 prepayment we will be able to get this done.

With a balance of approximately $253,500 we have been able to pay off 20% of our mortgage. If we were to stop making our prepayments we would have a remaining amortization of 21.8 years and have a projected savings of $146K.

We are still on pace to pay off our mortgage in 5 years and only pay $43K in interest. I am interested to look at our 2009 gross income and see what percentage we had dedicated to the mortgage and total housing costs.

October 2009 Mortgage Reduction Report

October is coming to an end and we were able to make a prepayment of $4200 on our mortgage for the month. We have missed the mark of $4700 and not made up any of the shortfall in September. This leaves us with a prepayment short fall of $2700 year to date.

A big expense got in the way this month, but was worth it. The desktop computer we were using was 4 years old and it was time for a new one. With the government allowing a Capital Cost Allowance of 100% this year on computers for businesses the purchase just made sense. It will be a good deduction for my taxes.

I will be receiving some business income in November and we are hoping we can play catch up a bit. Putting down $6000 may be achievable. Looking ahead to Christmas and tax time there will be some expenses that may not allow for us to prepay the full $4700 monthly. C’est la vie!

The mortgage balance at the end of October is a little over $258,000. We have now paid off 18.5% of our original balance. Not too bad, considering we have only been making payments for 15 months.