31 January 2014
Here is an approximate table that shows how much interest you can pay on a $150,000 mortgage, depending on the amortization period. For this example, let’s suggest you get an annual interest rate of 5.45% for the whole life of your mortgage.
The influence of amortization on total interest costs
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Mortgage amount |
Amortization |
Monthly payment |
Total interest paid |
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$150,000 |
35 years |
$764 |
$183,757 |
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$150,000 |
30 years |
$841 |
$152,860 |
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$150,000 |
25 years |
$911 |
$123,368 |
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$150,000 |
20 years |
$1,022 |
$95,391 |
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$150,000 |
15 years |
$1,217 |
$69,027 |
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$150,000 |
10 years |
$1,620 |
$44,360 |
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In other words, if you increase your payments by only $70 from $841 to $911 per month, you will pay off your mortgage five years earlier. As a result, you’ll save about $30,000 in interest costs.
If you decide to increase the monthly payment by $181, you’ll be mortgage free even 10 years earlier and save more than $57,000 in interest.