Saturday, March 3, 2012

How much interest would I save if I paid an extra $100 per month on my mortgage?

Our new mortgage is $116 less than before, so I was thinking I should add $100 in additional principal to every payment since we were already used to paying more. I was playing around with some numbers on interest.com and saw that adding an extra $100 to every payment will have us pay off our mortgage 3 years and 9 months earlier and will save us over $20,000 in interest! So I think I'm going to do that. I'd love to do more, but for now cash is king and I need to continue saving money. It would be stupid to pay down our tax deductible mortgage at 4.5% but then be stuck with a car payment (where the interest is not tax deductible) at 5% or more. My goal is to pay cash when the time comes to replace our vehicles. But if you don't have any big purchases like cars and windows coming up in the next few years and are debt free except your house, then maybe consider adding a little extra to each payment to save lots of money over the course of the mortgage. Here are some different scenarios based on our loan just to give you an idea of what you could save.


Prepayment amount$1,000 per month
Prepayment shortens mortgage by15 years, 8 months
Prepayment savings$81,077
Prepayment amount$600 per month
Prepayment shortens mortgage by12 years, 8 months
Prepayment savings$66,560
Prepayment amount$500 per month
Prepayment shortens mortgage by11 years, 7 months
Prepayment savings$61,124
Prepayment amount$400 per month
Prepayment shortens mortgage by10 years, 3 months
Prepayment savings$54,473
Prepayment amount$350 per month
Prepayment shortens mortgage by9 years, 5 months
Prepayment savings$50,553
Prepayment amount$300 per month
Prepayment shortens mortgage by8 years, 7 months
Prepayment savings$46,136
Prepayment amount$250 per month
Prepayment shortens mortgage by7 years, 7 months
Prepayment savings$41,117
Prepayment amount$200 per month
Prepayment shortens mortgage by6 years, 6 months
Prepayment savings$35,358
Prepayment amount$150 per month
Prepayment shortens mortgage by5 years, 3 months
Prepayment savings$28,677
Prepayment amount$100 per month
Prepayment shortens mortgage by3 years, 9 months
Prepayment savings$20,821

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