If you're one of the millions of people who have refinance their mortgage during this last period of low interest rate, that's awesome. But you may have accidentally reset your repayment period to 30 years, which means that you could end up carrying your mortgage into retirement, which can be kind of challenging because once your paycheck stops, that mortgage payment is going to need to keep going.

At a minimum, it means you're going to have to save more for retirement so that you have enough cash flow to service that debt. Let me give you a quick example. Let's say your mortgage payment is $1,500 right now of principal and interest. $1,500 a month, times 12 months a year is $18,000 a year. If you still have, say, 10 years left, you're going to need another $180,000 saved up so that you have the cash flow to pay off that mortgage without a paycheck coming in. 

If that sounds a little daunting to you, let me give you a quick solution instead that you can implement right now, called biweekly mortgage payments. And how it works is you're going to ask your mortgage service provider, “hey, do you allow for a biweekly repayment schedule?” Assuming they say yes, then instead of making a payment once a month, so 12 payments a year, you're going to make half of that payment every other week, which will translate into 26 weeks or 13 payments a year.

So, you've got a lot of money to do that. Pretty painlessly, you’ve now added one extra principal and interest payment to your repayment schedule. And the result of that is you're going to shave five to six years off of the term of your mortgage and save yourself tens of thousands of dollars in interest in the meantime. Also, don't worry if your mortgage service provider says, “no, we don't allow for that”, because you can still do the same thing yourself. 

Just simply look at your mortgage statement at the principal and interest. Again, in my example, say it's $1,500, pay an extra 10%, so $150 extra to principal each month. So, you'll code that in as an extra to principal payment when you pay your mortgage and then check your statement. Make sure that you're seeing it coded as an extra to principal payment. You'll accomplish the same thing, getting your mortgage paid off a good five, six years early, saving yourself all that interest.

It's a great mechanism. If you think, “you know what, I need to even get it paid off sooner than that five to six year period”, then go to bankrate.com. They have a great calculator there for mortgage repayments where you can put in your custom scenario when you want to have it paid off, and it'll tell you exactly how much extra you need to pay to principal every month. Trust me, it's easy to do once you get roll and it's automatic.

You won't even miss that extra money. You’ll be able to pop that champagne cork all the sooner on a paid off mortgage! You’re going to go into retirement with the peace of mind that comes with a paid off home, and then you'll be able to use all that retirement money on fun things instead!