You can keep “risk free”* USD treasuries on your personal balance sheet as assets versus “paying down” the cash into the mortgage. *(here “risk free” assumes US government doesn’t default, in which case there would likely be larger issues to worry about!)

Also this could get better over the next few months, if 30 year treasury rates could continue to rise. If rates go higher there is a possibility that the % yield on the 20yr treasury (or maybe even the 10yr treasury) could “beat” your own mortgage %. If so it would worth be waiting for rates to go up and ladder in slowly over the next year or two.

Predicting rate direction and speed of rate increases is notoriously difficult (otherwise we’d all be rich!). However  if US treasury rates do go up over the next 18 months, at some point getting (maybe) 0.5% to 1% in treasuries “risk free” over your mortgage  is potentially possible. According to the CME group interest rate predictions there is about a 50%/50% chance of a FED funds rate rise by this about time next year (select “July 2014″)

Anyway this is an interesting idea that hasn’t been possible for the last few years due to ultra low US government bond rates.

Wouldn’t it be great if you could find a way to pay your mortgage today with someone else’s money but still have the same mortage payment money available to invest for a year or more ? You’d only have to pay your mortgage payments a year or more later, leaving you the money to invest today. Think about how much investment opportunity that could provide you.

What if you could get a loan to do that at 2% or less for up to 2 years ? That interest rate is less than most people’s mortgage, so you could save significant mortgage interest by overpaying now, without having to actually pay up until many months later.

While you were waiting you could just use the money to put in a 1% savings account. That’s not much, but it reduces the 2% loan rate!  That’s also likely to be way lower than your mortgage rate right now!

You would be saving big on lifetime mortgage interest by overpaying many months earlier – without using your own money.

Using the 1% savings account and the “loan” is the basic Float My Mortgage method. Sign up for a free membership to see a 15min video that explains how this works in much more detail. A paid membership gives you the full process with manual, videos and spreadsheets.

If you wanted to try and make more return you could add the money to other investments you already own – other than a 1% savings account. This is an optional part of the method if you are comfortable with the increased risk. It is absolutely not required to run the basic Float My Mortgage method. This is the “super charged” version of the method to invest your mortgage payments.

Do one of the following options:
1) Refinance to a lower rate (can cost several thousand dollars to refinance)
2) Make bi-weekly mortgage payments (basically make one extra mortgage payment every year)
3) Round up your mortgage payments to nearest $100 – if your payment is $1950, just round up to $2000 (just slightly overpay principal each month)

Let’s have a look at these:

1) Refinance can be a smart way to take advantage of lower rates, but you have to qualify and potentially go through lots of red tape to get there. Also the fees to do this process are sometimes added onto your mortgage (rather than being paid out of pocket). Adding fees on to your mortgage could ultimately increase the amount of time taken to pay it off by 1 year to 3 years. This can be great long term decision if you plan to stay in your house for more than the next 5 years, but does have significant short term costs.
You can refinance to a lower 30 year mortgage rate, or take out a 15 year mortgage which typically has a lower rate. The only advantage to a 15 year mortgage is that typically you can get a lower interest rate than a 30 year mortgage. You can “create” a 15 year mortgage, by overpaying on a 30 year mortgage. Remember that a 15 year mortgage is really just a 30 year mortgage with extra principal payments!

2) Make bi weekly mortgage payments – this means that every 2 weeks you make a payment to your mortgage provider, instead of every month (e.g. for example if your monthly payment is $2000, you would make payments every 2 weeks). Over the course of a year, you would have paid. This is really just the same as making a one off annual principal payment, but it automatically enforces the discipline of doing this every 2 weeks through the year. This “bi-weekly” method is really just standard principal overpayment.

3) Round up your mortgage payments, so that you automatically overpay by a small amount each month. This is really identical to the “bi-weekly” method, you are just doing it with less principal each time.

All of these methods can be great methods to run – but they all have one massive disadvantage – they all use your own money.

The Float My Mortgage method uses this over payment technique, but allows you to super charge it using other people’s money to overpay many months in advance. You are taught how to get a “loan” at 2% and use that for mortgage payment months in advance. This saves you hundreds of dollars in mortgage interest in two ways: by overpaying in the standard way and by paying months in advance with other people’s money.

The Float My Mortgage method can be used as a “super-charged” over payment method.