Mortgage Amortization Calculator

The mortgage amortization calculator provides an annual or monthly amortization schedule of a mortgage loan. It can also give out the monthly payment amount and interest accumulation.

Amortizing a Mortgage Faster and Saving Money

Mortgage loans typically involve long periods of repayment because they generally consist of a large amount of money. The length of these loans helps the profit of the lending banks. The amortization table demonstrates this by showing the larger interest payments concentrated towards the beginning of the loan.

Various techniques exist that allow a person to amortize a mortgage faster and save money. If the loan contract does not explicitly permit using these techniques, it may be necessary to first negotiate with the lending bank to receive permission to do so.

Increase Regular Payments

One way to pay off a mortgage faster is to increase the amount of regular payments. It is possible to save a considerable amount of money and time by paying a small amount extra each month. For example, a $150,000 mortgage amortized over 25 years at an interest rate of 5.45% can be paid off two and a half years sooner by paying an extra $50 a month over the life of the mortgage, resulting in savings of over $14,000.

Accelerate Payments

Most financial institutions offer a number of payment frequency options such as monthly or biweekly. Switching to a more frequent mode of payment such as from monthly to biweekly has the effect of causing a person to make an extra annual payment. This will result in savings on a mortgage. As another example, a $150,000 mortgage amortized over 25 years with an interest rate of 6.45% that is repaid in biweekly rather than monthly installments can save a person nearly $30,000.

Make Lump Sum Payments or Prepayments

A prepayment is a lump sum payment made in addition to regular mortgage installments, which reduces the outstanding balance of a mortgage. This results in a shorter mortgage life. The sooner the prepayment, the less interest paid overall, and the sooner the mortgage will be entirely paid off.

Keep in mind that banks can have conditions governing prepayments, usually defined in the mortgage agreement that reduces the banks' interest earnings. These conditions may be a penalty for prepayments, a cap on how much can be paid in lump sum form, or a minimum amount specified for prepayments.

Refinancing a Mortgage

In refinancing, an existing mortgage is replaced with a new mortgage that is essentially a new loan, with a new interest rate, and new conditions. Refinancing can have its benefits, but it is important to weigh the comparison carefully and read the agreement thoroughly. Keep in mind the costs and fees associated with refinancing.