Mortgage Acceleration Tips

When I started building mortgage models, I realised that overpaying isn't just about the balance. There are a few things that happen "under the hood" of a bank's interest calculation that I didn't expect to find. I'm just a guy with a spreadsheet, but these five realisations changed how I look at my debt.

1. They Kill Interest at the Source

An extra payment goes completely to the core debt. Every dollar you pay early stops generating interest for decades.

The maths is always surprising. Imagine a $250,000 mortgage at 5% over 25 years. You add just $50 extra a month.

First, that tiny $50 saves you over $13,000 in interest. Second, it cuts a year and a half off your loan.

2. You Build Equity Faster

Third, you build equity much faster. Because your loan balance drops quicker, you own more of your home sooner.

Fourth, it protects you if house prices fall. Fifth, it acts as a forced savings account.

Many people struggle to save money. Sending it to the mortgage means you cannot easily spend it.

The savings are bigger than people expect because of compound interest working in reverse. You are not just paying off $50.

You are killing all the interest that $50 would have cost over 25 years.

Grab a calculator and plug in an extra $100 a month on your own mortgage balance. How many years of your life could you buy back?

Try It With Your Own Numbers