Paying Off Your Mortgage FAST!


— Slide 8: Making Large Upfront Payments —

Let's Take This One Step Further

Let's say you made 7 consecutive $5,000 lump sum payments each year at 12 months apart;

In other words, you made a lump sum payment for $5,000 on Month 1; another lump sum payment for $5,000 on Month 13; and the final lump sum payment of $5,000 on Month 73.

How much interest would this save you?

$100,000 Mortgage
30 Year Term - 6% APR

Monthly Lump Sum Payments
$0
7 - $5,000
Total Payments $215,838.19 $107,319.54
Total Interest Paid $115,838.19 $41,785.34
Total Principal Paid $100,000.00 $100,000.00
Total Interest Saved $74,052.85
Mortgage Payoff Time 30 Years 14 Years

$200,000 Mortgage
30 Year Term - 6% APR
Monthly Lump Sum Payments
$0
7 - $5,000
Total Payments $431,676.38 $349,775.27
Total Interest Paid $231,676.38 $133,695.03
Total Principal Paid $200,000.00 $200,000.00
Total Interest Saved $97,981.35
Mortgage Payoff Time 30 Years 20.9 Years

The Magic is Paying Up-Front

The goal is to get more of your monthly payment paying off the principal. By making large lump sum payments up-front, you can reach your mid-point must quicker.

In our example above, we were able to meet the mid-point as follows:

$100,000 loan: 5.2 years (vs. 18.6 years with no lump-payments)
$200,000 loan: 9.3 years (vs. 18.6 years with no lump-payments)

mid-point is where your mortgage payment begins to pay more on principal than on interest

Download this spreadsheet to run your own numbers.

FREE Download (MS Excel Worksheet)

You can enter lump-sum payments to analyze your payoff terms and interest savings

 

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about mortgages (Part 1)