Look Who’s Shopping Now

Most people don’t realise that they aren’t tied to a 25 year mortgage. It’s flexible and it’s on your terms. You can increase the length to 30 or decrease it to 20 years depending on your financial circumstances.

If you had a monthly payment of about 500 you could decide to pay 540 instead every month. What do you think would happen if you did this for 25 years?

We’ll use a 100,000 mortgage as a test. We have a 25 year term and a 5% interest rate. We pay about 580 per month and end up paying a staggering 175,000 back in total.

Now, using the same figures we would pay just 20 per month extra to make a rounded 600 a month. Our new total payback would fall to just under 170,000 we save an extra 5 thousand. And we shave a year and a half off the 25 years.

Over 25 years 5,000 and a year off doesn’t seem great but using a mortgage overpayment calculator we can put all sorts of different figures in and see what comes out if we paid a bit more.

Here’s another example where we pay 50 a month extra.

Ame example figures, but this time we pay 50 extra every month we get nearly 4 years shaved of the term and 12 thousand in cash, saved.

Using a mortgage overpayment calculator allows you to make long terms plans to save money and put the cash back in your pocket not the lenders.

Here’s a further example but overpaying a little bit more than we did in the earlier examples.

Let’s keep the same figures, 25 years at 5% with 100,000 borrowed. We’ll overpay an extra 100 a month. This gets us a saving of over 20 thousand and it knocks over 6 years off the term. That’s some serious savings in time and money.

You might be thinking that it’s hard to pay an extra 100 a month and it doesn’t really make a difference as you will have paid an extra 23 thousand just in the 100 per month overpayments.

Considering you won’t have to pay anything for the next 6 years you will have at least 680 every month to yourself. Nice sum of money.

You might be shocked at the amount of savings you can make when you play with a mortgage overpayment calculator.

This entry was posted on Tuesday, March 31st, 2009 at 8:33 am and is filed under money. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.