Pre-Pay Mortgage Savings Calculator
Depending on the structure of your mortgage, making additional payments can reduce the amount of interest you pay during the life of your mortgage and lower your monthly balance. While you may not always be able to afford prepayments, by making a few adjustments in your monthly budget, adding extra payments to your mortgage can save you thousands of dollars in the long run. Plus, you can build up equity in your home faster, which can also benefit you in the long run.
Use our Mortgage Prepayment Savings Calculator to calculate what your prepayment amounts could be, your present loan balance and the remaining years on your mortgage.
When using our calculators, remember the dollar amounts displayed aren’t guaranteed, and what you actually pay may be different. The estimates are for illustrative and educational purposes only.
What Is Mortgage Prepayment
When you get a mortgage, you agree to pay a certain amount of money for a certain amount of time — usually 15 or 30 years. But did you know that you can pay more each month to reduce your term?
Mortgage prepayment is the process of putting additional money toward your mortgage principal. You can prepay a little bit every month, make a large one-time payment or a combination of the two.
Many homeowners will prepay when they receive extra money from gifts, holiday bonuses or an inheritance.
If you're making your mortgage payments each month comfortably, you may consider prepaying. There are three key benefits to prepaying your mortgage:
1. Lower your term: Putting more toward your principal each month will help you repay
your balance sooner.
2. Save on interest: Repaying your loan faster means there will be less time for it to accrue interest, potentially saving you thousands of dollars.
3. Build home equity: Prepaying your mortgage allows you to build equity faster by putting more toward your principal each month. With more equity, you'll keep more of the money if you sell before your loan's term is up.
How Much Can I Save?
Prepaying your mortgage can save you thousands of dollars. Even adding a small amount to your monthly payments can shave years off of your term.
For example, let's say you purchased a home a year ago on a 30-year mortgage with a 3.25% interest rate. Now, with 29 years remaining on your term, your principal balance is $121,200.Adding $200 dollars to your monthly payment or $2400 a year may reduce your term by 10 years and eight months, saving you $26,798.04 in interest.
Tips for Prepaying Your Mortgage
Considering mortgage prepayments? Here are a few things you should do to ensure prepayment isright for you:
- Set a strict budget so you know exactly how much additional money you can contribute toward your mortgage.
- Make additional payments toward your principal rather than escrow.
- Discuss prepayment fees and how they'll impact your budget.
Discuss You Prepayment Options
At First Commonwealth Bank, we're passionate about helping homeowners make the most of their financial circumstances. Our team is available to help you decide if prepayment is right for you. Please request an appointment to meet with a banker in your area.