AgentMortgage

Can I cut my mortgage’s life in half?

Doubling down on amortization: a sensible repayment strategy

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

"I have been advised that I can cut the life of my mortgage in half by making an extra payment to principal each month equal to that month's principal payment. Is this true?" I have been asked this question many times and have always answered it in the same way. "No, it isn't true, because your extra payments are too small in the early years." Only recently did I decide to actually test the idea that doubling the amortization would halve the life of a mortgage. Using an extra payment spreadsheet from my web site, I assumed a 15-year loan at 6 percent, and made extra principal payments equal to the principal portion of the monthly payment. I quickly realized that there are two ways this can be done. One way is to make extra payments equal to the original schedule of principal payments. When I did it this way, the loan paid off in 100 months, not 90. However, if I based the extra payments on an actual schedule that reflects the impact of prior extra payments, payoff occurred in 91 mo...