Free Mortgage Payoff Calculator to overpay and pay off mortgage early 2020
At the time of writing, our video on how we paid off our mortgage in 7 years has been viewed by almost 60,000 people on YouTube.
Whilst I think my jokes in the video are somewhat funny, that video continues to do well for a number of reasons.
Spelling out the unspoken obvious – I am a black male millennial immigrant who is mortgage free.
There, I said it, now you can relax!
Throw in the fact that I’m married with kids, and you can start to see why this is seen as a big deal.
However, I think there is more to why this video continues to do well.
When all is said and done, all the people who tell you that you should not pay off your mortgage deep down really want to be mortgage free.
They’d take it any day if they could do it.
With the new decade, figuring out how to pay off mortgage early is high on many people’s lists of goals.
Not least because becoming mortgage free means that you’re closer than ever to the possibility of true financial independence.
You ofcourse don’t need to be mortgage free to do it. With some creativity, you can seek alternative paths.
However, it certainly helps your overall life if this is a goal that you can pursue and achieve.
I can tell you for sure that there is nothing more liberating than having no personal debt tied to your life.
It is a long slog to become mortgage free, but if it is something you want to achieve, you must first accept it as a credible goal in your life.
Then you start taking the practical step of actually understanding how mortgages work (usually against you 😤).
Once you’ve figured out how they work, you’d usually need a tool to personalise your learning to yourself.
I.e. to run various scenarios so that you can see what impact mortgage overpayments at any amount have on your mortgage (and life!! Hello!).
This is where our free mortgage payoff calculator comes in (recently updated for 2020).
For today’s post, I’m sharing our personal mortgage payoff calculator with you, and specifically showing you how it works.
Mortgage Payoff Calculator
If you’ve ever wondered what it would cost you to wipe 2 years, 5 years, 10 years, etc off your mortgage, then this is the tool 😎.
It is also super useful for working out what impact overpayment of any amount have on your mortgage term (years).
Finally, it is super useful if you are a first time buyer and soon to take on your first mortgage.
It will help you play with various scenarios so that you can plan your financial life well.
Plus work towards to paying off your mortgage early.
Own your own custom mortgage payoff calculator here (FREE Download):
If you enjoy this spreadsheet, please comment on the video below and give us a shout out on YouTube:
Here is what the actual mortgage payoff calculator looks like when you download it:
Below is a simple scenario of someone with £250k mortgage at 2.98% over 35 years.
The yellow cells are the inputs to change.
The grey boxes shows you your payments in the first 12 months:
The grey boxes below show you your payments in the next x-years of your mortgage.
In this example, 35 years…
I created a simple chart so that you can see how your mortgage changes over the years:
This other chart shows you how your interest payment every year declines.
The curve will be steeper the more you overpay. See for yourself in the download:
This chart shows you how the percentage of capital payments changes every year.
You want this percentage rising as quickly as possible because then you're actually paying down your real debt:
Here I got a bit geeky to show you how your total interest over the term is affected by changing both your mortgage interest and mortgage term:
This final chart is critical. It shows you how your Total Debt (principal + interest) changes over the term as you change both your mortgage term and interest rate:
Ok, once you download our beautiful spreadsheet, follow the step-by-step instructions below to use it.
How to Use The Mortgage PayOff Calculator
I have created some scenarios to keep things simple:
Scenario 1: You want to reduce the years on your mortgage and see how much to pay
Simply follow these instructions to replicate your current mortgage payment:
The below instructions are for you to change the inputs on the spreadsheet:
Cell E17: Enter Your Mortgage Loan Amount (aka Principal)
Cell E18: Enter Your Current Interest Rate
Cell E19: Enter Your Current Mortgage Term (years)
Cell E20: Enter The Current Calendar Year
Cell E21: Enter The Current Calendar Month
Cell L16: Enter Your Current Monthly Mortgage Payment
Once you do this, Cell J16 should show your implied Current Mortgage Amount.
If this matches what you entered in Cell L16, then it shows you this mortgage payoff calculator is working.
Now You’re ready to reduce the years on your mortgage to see what it means for overpayments:
Cell E19: Change to any number of years you want to become mortgage free in.
The spreadsheet (and graphs) will immediately recalculate and show you your additional overpayment on Cell M16.
This is the result that you are looking for.
Scenario 2: You have found a cheaper interest rate and want to see what impact it has on your payments.
Repeat the steps above to replicate your current mortgage.
Then after that, simply do this:
Cell E18: Change this cell to the new interest rate that you have.
The spreadsheet (and graphs) will immediately recalculate and show you your new on Cell J16.
If you included your current mortgage amount in Cell L16, then cell M16 will show you your reduced monthly mortgage amount.
Recommendation: Don’t take the lower amount as savings. Call your bank and continue to make overpayments.
The lower interest is there to work in your favour. Rather than reduce your monthly amount, if anything, increase it.
Scenario 3: You want to overpay by x-amount per month and see the impact.
In this example, you want to overpay by say, £100 or £200 or whatever per month.
Then you want to see how this impacts on your mortgage.
To do this, please repeat Scenario 1 above to enter your current mortgage details.
Don’t forget to also include your current monthly mortgage amount in Cell L16.
Then, simply reduce the years (Cell E19) to any number of years to see what overpayment amount it gives you in Cell M16.
If the amount of overpayments implied is more than the amount you want to pay, increase the number of years in Cell E19 slightly.
However, if the amount of overpayments is less that you want to pay, then reduce the number of years a bit.
Keep playing the years till the amount in Cell M16 is closest to what you want to overpay by.
The number of years you have on Cell E19 will be the number of years you’d need to make those overpayments for.
E.g. If your original mortgage was 25 years and your overpayments of £100 reduced your years to 22 years, it means you’ll save 3 years by making £100 overpayments monthly.
Scenario 4: You’re a First Time Buyer and simply want to see how your mortgages are spread out yearly + You want to reduce years to see how it works out.
Imagine you’re buying a property that costs £400,000.
The bank tell you that you need to put down 10% deposit i.e. £40,000.
This means that you’re borrowing £360,000 as a mortgage.
Let’s say that they also tell you that you’re borrowing this amount at 2.99% over 25 years.
Simply follow all the steps in scenario 1 above to enter these numbers above.
The calculator will do the rest for you.
You can then play around with some of these inputs like I have shown you in Scenario 1.
Pro Tips for the Overpay Mortgage Calculator
Here are additional things to look out for on the mortgage extra payment calculator:
1. Look at the various graphs that I have included in the spreadsheet.
They visually help you understand your numbers.
2. Check out the numbers from Cell K39 and L39 respectively.
They show you what percentage of Capital vs Interest that you’re paying off each year.
3. Explore the scenario analysis that I have created around Cell M88 & M126 respectively.
The show you visually some very important scenarios i.e.
i) impact of changing your years and mortgage interest rate on your Total interest paid over the term of your mortgage.
ii) The impact of changing your years and mortgage interest rate on your Total (Principal + Interest) paid over the term of your mortgage.
Ok dreamers, that’s it!
If you find this post and tool useful, please do 2 things for us:
- a) Share it with others and let’s together help others become mortgage free.
- b) Please show some love by subscribing and commenting on Our YouTube Channel.
Finally, if you’re wondering whether you should be investing through the stock market or working to pay off mortgage early, watch this:
Happy Debt Freedom! 😊
What To Read Next>>
- How To Pay Off Your Mortgage Early And Why You Should
- 7 Essential Habits For A Successful Debt Free Journey
- Why Setting Goals Is Important For Debt Freedom
Are you currently working towards mortgage freedom? How many years do you have left on your mortgage? What changes have you made to afford your overpayments?
Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.