When can I pay off my mortgage?

The results are in a grid. You can see that for a $175k house and a monthly repayment of $1,339 the mortgage will be paid off in 15.7 years. (Top left number in the grid).

Or you could opt to over-pay with $1,750 a month. You can see that the mortgage will now be paid off in 10.4 years.

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But if you purchased a $250k house then the term will lengthen to 17.4 years.

I’ve even put in a groovy little chart to show things graphically.

Another Example

Let’s now increase the interest rate to 4.5%




I’ve taken exactly the same data but increased the interest rate to 4.5%. You can see that all the times have increased, but not equally. The short time periods have increased by a little and the long time periods have increased by a lot.

[This is a phenomenon called duration. Interest rate changes have a disproportionately large impact on things that last for a long time.]

In the spreadsheet you can change all the monthly payments, and also change the house prices so it’s really easy for you to model your own scenarios.

This article has been republished with permission from Actuary on Fire.