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)