Mortgage Acceleration Example

Michael Jensen, Mortgage and Finance Guru

Updated November 11, 2020

The graphs below illustrate the mechanics of applying mortgage acceleration to a fixed rate mortgage.  The example uses a $380,000 30 year fixed rate mortgage with a 4% interest rate.  The graph at the top of the page shows the amortization, or split between principal (dark blue bar) and interest (light blue bar), and mortgage balance (green diamond) for the mortgage with NO acceleration.  As you can see, you pay mostly interest at the beginning of the mortgage and mostly principal at the end of the mortgage and the mortgage balance is zero at the end of the mortgage, or year 30 in this example.

• Learn How Mortgage Acceleration Works

The graph at the bottom of the page shows the impact of the borrower accelerating his or her mortgage by $200 per month.  As illustrated by the graph, the borrower pays down the principal amount of his or her loan faster, which results in a significant reduction in the length of the mortgage, mortgage payments and interest expense.  In the acceleration example, the mortgage is paid off in year 25, as opposed to year 30, which saves the borrower more than $55,000 in interest expense.

• OurMORTGAGE ACCELERATION CALCULATORcalculates the savings from overpaying your loan
  

Use your cursor to hover over the columns on the charts to magnify the numbers.