I wrote to my building society on 28 April asking what options I had if I wanted to repay my house in a shorter period, say in five years or, just like a car, in three years.
Their reply dated 13 May read as follows:
“We thank you for your letter dated 28th April 1986, and would like to advise that at the present rate of repayment your account will be repaid in 22 years and nine months.
“However, should you wish to repay your loan within five years it will be necessary to increase your repayment to $350.00 per month. To repay in three years the repayment will be $510.00 per month.”
This was an even greater shock to me. I could pay off my house in five years just by paying an extra $165 or in three years by adding an extra $325. That was something worth looking into.
The savings were going to be tremendous. By taking the five-year option, I was going to pay an extra $21 000. This together with the $4 995 I had already paid in the 27 months since I bought the house would bring the total to $25 995.
If I took this option I was going to save $29 505 and pay less than half of the original amount I was going to pay if I repaid the loan in 25 years.
Under the three-year option, I was going to pay an additional $18 360, plus the $4 995 I had already paid, this came to $23 355.
This, as you can see, was not a very attractive option.
I could cut my mortgage by 17 years paying less than double what I was paying. Yet under the other option I would only cut my repayment period by a further two years but paying almost three times the amount. This did not make sense.
It was in view of this that I began to look at ways in which I could speed up my repayments without adding an extra burden to myself.
Here is one thing I discovered.
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