Question:

How paying off more principal affects the early payment of mortgage?

Answer:

It is true that regular amounts applied to the principal result in early payment of the mortgage. Whether you apply extra $100 towards the principal every month, or make a lump sum once a year, the effect will be earlier repayment of the mortgage.

How to know the amortization schedule when you make additional payments to pay off your mortgage early?

Calculate the effect of the additional payment using a mortgage calculator designed to take additional payments. There are online calculators that can be pretty useful for that purpose.

Take an example of $150,000 remaining mortgage balance at 6% for 15 years. The regular principal & interest payment results in $1265.79 monthly; another $150 to the monthly payment will result in around 29 monthly payments less and two years and a half shorter term. Your overall mortgage interest cost (IC) is greatly reduced - with tens of thousands - if you are paying $150 extra each month.

Even some $50 a month can significantly affect the early pay off of your mortgage loan. Since in the early years of the home loan you are paying mostly interest, your mortgage amortization term and cost is greatly reduced by making regular additional payments towards the principal, no matter how small.

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