So, if you pay early, you can save that $750 every month. But the rest of $750 is going to the lender and it is a spent. So, you’re saving 250$ (assuming the tax rate is 25%) every month. But my question is how much?įor example, you pay $1000 interest on the home loan. Some people might come up with the logic that interest spending is tax deductible. This will make your life more flexible and enjoyable.Ģ) Though Interest Spent is Tax Deductible, You’re Losing Money at the End of the Day You will save a lot of money as interest savings if you can prepay your home loan. The negative sign for monthly payment is that you are paying this amount.Īdvantages & Pitfalls of Early Mortgage Payoffīeing debt-free will open many doors in front of you.The annual rate is divided by 12 because we are calculating the number of months.It will take approximately 66 months to repay the loan. Excel will calculate the number of months. Go to C7 and write down the following formula.To calculate the number of months, we will follow the steps. The NPER function will calculate how many months it will take to repay a loan of a certain amount and the interest rate. Now, let’s learn something about loan payoff and the NPER function. In the above image, you see that she can add any amount of extra payment to her regular monthly and regular extra (recurring) payments.Īnd she will be able to repay her loan completely in 11 years, 4 months, and 0 days. Extra Irregular Payment: Don’t know the date but she can add it in any loan period.Extra Payment Starts from Payment No.: 10.So, here are some more details of her present decisions: And an irregular extra payment: When she would have some extra amount to pay, she wants to pay her lenders.But it can be also bi-monthly, quarterly, and yearly. A recurring extra payment: She plans to pay 500$ extra after every month.With her regular loan payments, she wants to extra pay her loan in two ways: Suppose, Fallon has taken a mortgage loan of an amount for her newly bought home. This time I will use the Mortgage Payoff Calculator for Extra Payment (Recurring / Irregular / Both). Just change the Extra Payment Frequency from Monthly to Quarterly.īlake finds that after every 3 months, he has to pay $2892.20 extra to pay off the loan in the next 10 years.Įxample 3: Application of Recurring Extra Payment What if Blake wants to pay the extra payment quarterly, not monthly? On the right side of the worksheet, you will find the summary of the loan like Total Amount to be Paid, Total Interest to be Paid, Interest Savings, Total Time, etc.Įxample 2: Use of Quarterly Extra Payment Frequency.Blake has to pay $954.10 extra every month if Blake wants to pay the loan in the next 10 years rather than the 20 years (his original loan terms).(Target) worksheet to put in the loan details. Now he is planning to see how much he has to pay extra if he wants to pay off his loan in the next 10 years (rather than 20 years). The annual Percentage Rate is 6%.įor the last 6 months, he has tracked down all his expenditures and found a way to extra pay $2000 a month with the regular payment of his mortgage loan. Let’s start then!Įxample 1: Use of Monthly Extra Payment Frequencyīlake had taken a home loan of amount $250,000 on Jan 10, 2018. ![]() In this section, we will demonstrate 3 different examples to use early mortgage payoff calculator. Tax Deduction: Mortgage interest is tax deductible.ģ Examples of Using Early Mortgage Payoff Calculator in Excel.Interest Savings: If you make extra payments with your regular payments, you will save some interest.It totally depends on your lenders how you can pay your extra amount. There are two types of Extra Payments: Regular Extra Payment and Irregular Extra Payment. After paying your monthly amount, whatever you pay is considered an extra payment. Extra Payment: Extra payment you want to pay every month.Say, your home loan APR is 6%, then the interest rate for a month will be 6%/12 = 5%. Annual Interest Rate (APR): Annual Interest Rate you will pay for your loan.For a mortgage loan, it is normally 15-30 Loan Terms: This is the total number of years you and the lender have agreed upon to pay off all the interest and loan.This includes the interest amount of the loan for a period (normally a month) and a portion of your principal amount. Regular Monthly Payment: This is the amount you will pay every month.Principal Amount: The original amount you took from a lender as the loan.Let’s first look at some critical definitions regarding Mortgage calculation.
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