Can Small Extra Payments Lead to Big Early Mortgage Payoff Savings?

Making small additional payments can result in significant early mortgage payoff savings.

With 30-year mortgage rates at the highest levels in years, adding even a small amount to your monthly payment can greatly reduce the amount of interest you pay over time.

Let’s look at a few examples of how slightly increasing your payments can lead to considerable early mortgage payoff savings.

Base Scenario and Key Assumptions

For this example, here are the main assumptions:

• The average U.S. home price: $420,800
• Interest rate: 7.50% (as of the early third quarter of 2024)
• Down payment: 10%
• 30-year fixed mortgage
• Monthly payments include only the principal and interest, excluding property taxes, homeowner’s insurance, and mortgage insurance

Without making any additional payments, you would pay a total of $574,583 in interest over the life of the loan. This brings your total cost for a $420,800 home to nearly $1 million when interest is included.

Nobody wants to pay nearly $1 million for a $420,000 house, so let’s explore how making a few small changes can yield early mortgage payoff savings.

Here’s a summary of the basic scenario assumptions alongside the potential interest savings and time reductions for paying off your mortgage in each example.

Example #1: An Extra $100 a Month

By adding $100 to your monthly mortgage payment, you could save $81,902 in interest and reduce your loan term by about 3.5 years.

Example #2: Lump-Sum Payments at Years 5, 15, and 25

If you make lump-sum payments of $5,000 at the 5th, 15th, and 25th years of your mortgage, you may not shorten your repayment period by much, but you’d still save almost $37,000 in interest.

Example #3: An Extra $200 a Month

If you can afford an extra $200 a month, you could pay off your mortgage six years earlier and save a massive $140,000 in interest—creating substantial early mortgage payoff savings.

Every Little Bit Helps

Even a small amount, like $10 more per month, can result in nearly $10,000 in savings over the life of your mortgage. That’s money you keep instead of giving to the bank.

Paying off your mortgage early doesn’t require huge amounts of extra cash. Whether you can manage $100 or just $10 more a month, any additional payment helps in the quest for early mortgage payoff savings and a stronger financial future for you and your family.

To explore more ways to save on your mortgage and maximize early payoff savings, reach out to us at 832-303-3995 or book your appointment today.