Mortgage Loan - Extra Principal Payments
In many mortgage contracts, making extra principal-only payments is permitted. These extra payments can significantly reduce
the time of the loan, and save quite a lot of interest.
Even occasional extra payments will make a difference, but the recommended strategy is to pay the same extra amount each month,
so that it "feels" normal. When you need some extra cash, just skip the extra payment, and pick it up the next month.
30 year fixed, $250,000 mortgage, 7.50%
with extra principal-only payments per month |
| Mortgage |
Extra Payment |
Years |
Interest |
| $1,748 |
$0 |
30 |
$379,284 |
| $1,748 |
$50 |
27 |
$336,569 |
| $1,748 |
$100 |
25 |
$303,914 |
| $1,748 |
$250 |
20 |
$238,504 |
| $1,748 |
$500 |
16 |
$178,491 |
| $1,748 |
$750 |
13 |
$143,763 |
| $1,748 |
$1,748 |
08 |
$ 82,332 |
$500 extra principal-only payment
nearly reduces the loan 50%
saves over $200,000 of interest |
