UNDERSTANDING YOUR MORTGAGE - PAYING IT OFF IN HALF THE TIME!

 

MORT gage - the original meaning!

MORT = death GAGE = pledge

Mortgage never meant “equity-building loan.” Historically it was a stark legal term: a pledge that stays alive until the debt is killed off or the property is lost.

Five years into a “normal” Canadian mortgage

Take a pretty typical setup:

• Purchase price: $500,000

• Down payment: 20% ($100,000) → $400,000 mortgage

• Amortization: 25 years

• Interest rate: 5%

• Payments: monthly

In that case, the math looks roughly like this over the first 5 years:

• Monthly payment: about $2,340

• Total paid over 5 years (60 payments): about $140,000

  • Of that:

    • ~$95,000 is interest

    • ~$46,000 is principal

• Mortgage balance after 5 years: still about $354,000

So after five solid years of never missing a payment:

• You’ve only knocked the balance down from $400,000 → $354,000

• You still owe about 89% of the original principal

• Roughly two-thirds of everything you’ve paid so far was interest, not ownership.

At lower rates (3–4%) the mix is a bit less brutal, but the pattern is the same: in the early years of a long amortization, most of the payment is interest and only a thin slice bites into the principal.

How fast does the “death pledge” die if you double the principal?

Take a very typical Canadian setup:

• Mortgage: $400,000

• Amortization: 25 years

• Rate: 5%, monthly payments

Normal case (no extra):

• Monthly payment ≈ $2,338

• Paid off in 25 years

• Total interest over the life: about $301,000

In the first payment, roughly:

• $1,667 is interest

• $672 is principal

Pay off your mortgage in half the time:

“Just double your mortgage payment and see how fast the mortgage dies. Not talking about doubling the PI, just the P…”

Translated into math:

👉 You keep making the regular payment plus an extra amount equal to that month’s scheduled principal portion.

So in month one, instead of paying $2,338, you pay about $3,010 (the extra ~$672 goes entirely to principal). In month two, you again match that month’s principal, and so on.

Do that consistently and here’s what happens:

• Mortgage is gone in about 151 months ≈ 12½ years

• Instead of 25 years

• Total interest paid drops to about $151,000

🔻 Result:

• You kill the mortgage in roughly half the time

• You save about $150,000 in interest on that example

• Why you never hear this from the bank

  Because:

  • Every extra dollar to principal is a dollar that stops generating interest forever.

  • The first 5–10 years of a mortgage are the juiciest years for the lender – lots of interest, little principal reduction.

  • Aggressive prepayments chop off those fat-interest years first.

  So yes, in a world where people are being sold 25–30 year “death pledges,” the unadvertised counter-trick is:

  Any extra to principal – even $100–$200/month – shortens the term and strangles the interest. Doubling the principal portion is like cutting the mortgage’s life expectancy in half.

  “Mortgage means death pledge. The banks hope the debt outlives you. Double your principal, and you make sure the debt dies first.