Mortgage Acceleration Calculator
Use our Mortgage Acceleration Calculator to determine how much money you can save and how quickly you can pay-off your mortgage by accelerating a fixed rate loan, or paying more than your required monthly payment. Mortgage acceleration reduces the length of your mortgage which lowers your total interest expense over your loan term. Use our Mortgage Acceleration Calculator to evaluate numerous scenarios and better understand the financial benefits of overpaying your loan.
How Our Mortgage Acceleration Calculator Works
To use the calculator input your original mortgage amount, interest rate, loan length, mortgage start date, overpayment start date and monthly overpayment amount. For example, if your required mortgage payment is $900 but the payment you actually make is $1,000, your monthly overpayment amount is $100. It is also important to highlight that you should input your original loan amount and not your current mortgage balance.
Please note that you can start accelerating your mortgage at any time so your overpayment start date may be different than your mortgage start date.
Based on your inputs, the calculator shows you your estimated required mortgage payment, number of required payments and total interest expense over the life of your loan both with and without acceleration.
The calculator also determines your monthly payment with your overpayment as well as the reduction in the required number of payments and the difference in total interest expense attributable to mortgage acceleration. These outputs enables you to understand how many payments and how much money you save by overpaying your loan.
For example, a 30 year fixed rate mortgage requires you to make 360 monthly payments (12 payments per year x 30 years). Depending on your loan terms and the amount of your overpayment, you may reduce the length of your mortgage by several years which also significantly lowers your interest cost, as illustrated by our calculator.
The chart below the calculator illustrates how acceleration reduces the length of your loan and speeds up the paydown of your principal mortgage balance.
What Borrower Should Know About Mortgage Acceleration
Mortgage Acceleration Basics
Accelerating your mortgage means paying more than the required monthly payment. For example, if your required monthly mortgage payment is $1,500, you make a payment of $1,700 with the extra $200 going to pay down the principal balance of your mortgage. When you accelerate your mortgage you pay off your mortgage faster which shortens the length of your loan and saves you money on total interest expense. Depending on your mortgage amount and interest rate, accelerating your mortgage by even a small amount such as $100 - $200 per month can shave years off of your mortgage and save you tens of thousands of dollars.
When You Can Accelerate Your Mortgage
Borrowers have significant flexibility over when and by how much you accelerate your mortgage. Simply add the amount by which you want to accelerate your mortgage to your monthly payment and indicate to your lender that the extra money is applied to your principal mortgage balance. You can accelerate your mortgage by $250 one month and $400 the next month and you can start and stop accelerating your mortgage at any point. So even if you are twelve years into a 30 year loan you can start accelerating your mortgage and realize the financial benefits.
Beware of Mortgage Acceleration Scams
Borrowers do not have to pay any extra fees to accelerate their mortgage. Some lenders and companies offer mortgage acceleration programs to borrowers for a fee; however, you can accelerate your loan on your own for free. Most mortgage acceleration companies and programs offer borrowers minimal value. Additionally, many of these companies have engaged in fraud in the past by not applying the extra payment amount to the borrower's mortgage balance. Borrowers should research mortgage acceleration programs very carefully and generally avoid them.
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How Mortgage Acceleration Works
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Ask a Mortgage Expert
Got mortgage questions? We love answering them. Submit your mortgage questions and receive an informative response within 24 hours
Mortgage Acceleration Example
Review a detailed example of mortgage acceleration including a comparison of an accelerated loan to a loan where the borrower only makes the required payments
Sources
“CFPB Takes Action Against Mortgage Payment Company And Servicer For Deceptive Ads.” CFPB. Consumer Financial Protection Bureau, July 28 2015. Web.