Do the calculation for the time frame that you are wanting so you know the amount that would be paid in that time frame. Then use that amount to figure the percentage.

The calc doesn't vary much. Find a site that gives you a year end balance for each year of the loan. Put in a loan amount of 100K, start the loan on Jan 1 2020. The remaining balance at year end of years 5 and 10, or after 60 and 120 months, will answer your question.

Use this amortization calculator.

https://www.creditkarma.com/calculators/amortization/

Thanks. I knew I could do the calculations and get the number. But it occurred to me that the percentage does not change regardless of the amount borrowed or the interest rate, and somewhere on the internet, those numbers are out there.

Whatever it is, it will hurt your feelings. If you pay biweekly, you'll pay the principal down 7 years quicker...by basically making two extra payments a year. Something to think about if you can't spring for a 15year loan.

Or save your money, esp if you can get a better return than the mortgage interest, then pay it off as a lump sum. Esp early on, you get a tax deduction on the mortgage interest.

This is actually one of those "asking for a friend" questions. A friend with some debt is considering refinancing his mortgage and taking out cash to pay off that debt.

The refi on its own makes a lot of sense because he has PMI and it will be eliminated. Because of certain circumstances, he knows he will be selling his house in 5 years.

I'm trying to figure out what his situation could be in 5 years. I don't have any of the numbers related to his specific condition, so I'm looking at this purely in the abstract. It seems to me that this is the kind of move that could put you under-water, as they say, when it comes time to sell.

That assumes that your crystal ball is working regarding home values. Remember the crash about 12 years ago? Or the upswing in prices that preceded it?

of course you can add what you want to principal, but most aren't disciplined enough to do that, but will have to pay the bill if they set it up for biweekly instead of saying "ah shuks, i don't feel like paying extra principle this month. Paying for something for 30 years is insane. If you have to do that, you don't need it.

That depends on how much interest he's paying on the other debt. It might be cheaper to roll it into one, but then again, it's not sound financial practice to take 30 years to pay for a shirt.

Annie, that was my initial thought - don't turn short term debt into long term debt. And it seems even worse to then quit the long term debt after 5 years. But then there is the federal and state tax savings on the now larger deductible mortgage interest.

If the person has other large debts in five more years they will have additional debt. This is something that is warned against doing by people who do credit counseling. You might want to suggest that talking to a credit counseling service before doing this would be a wise idea unless this debt is a one time thing.

then there is the federal and state tax savings on the now larger deductible mortgage interest.

But now with the higher standard deduction on tax returns, many (most) people won't have nearly enough interest and other deductions to go over that amount.

" esp if you can get a better return than the mortgage interest, then pay it off as a lump sum. "

If you can get a better return than the mortgage interest rate, then don't pay off the mortgage now or later, use the money to make investments. You're ahead by the amount the investment yield exceeds the mortgage interest. In essence, you're paying a lower price for the use of the money than it's producing. Also, it may be that the income is favorably treated (cap gains, dividend income, municipal interest) while the deduction is fully allowable which increases the spread of the return. Even a conservative general individual investment portfolio will produce a return greater than all but the most ill timed of mortgage rates.

I understand the sentiment of paying off a mortgage or accelerating principal paydowns for emotional reasons but financially, it's usually not a good decision to do so.

Refinancing a first mortgage makes sense only if the cost of the loan can be reduced OR the money is needed for a useful purpose. If someone expects to sell in 5 years, the cost of the refinance itself (escrow, loan fees, appraisals, etc) need to be added to the (presumably) reduced interest charges and THAT compared to doing nothing over the 5 years.

" Remember the crash about 12 years ago? Or the upswing in prices that preceded it? "

Don't forget the HUGE run-up in in housing prices since then, in many areas.

I refinanced 10 years into my mortgage to pay off all my credit card debt. The about six or seven years ago I thought I was so close to having my house paid off. I took out a pen and paper and started doing math. If my husband has no income tomorrow, what can I afford to pay. I paid weekly. By adding just a few dollars a week, and I do mean a few, I reduced my mortgage by six years! My husband came into some money and we were able to pay it off another 16 months early. I think the mortgage part itself was paid 10 years after we bought the house. The next 11 was interest....

I think the mortgage part itself was paid 10 years after we bought the house. The next 11 was interest....

But that's not how the repayment schedule is structured. The front side of the mortgage is highly tilted towards interest.

Most mortgages pay very little toward principal for many years. People thinking this should look at the annual statement that the mortgage company sends to see exactly how much went to principal and how much to interest. I have heard the idea that what is paid in the final years is all interest. Some mortgages do allow extra amounts to go to principal but you have to designate, or at least our mortgage did, that the amount go to principal,

Payment amounts and the amortizations are based on mathematical formulas.

Mortgages have level payments throughout and of course the interest component is highest at the start because the balance outstanding is at its highest. As payments progress, less interest on the remaining balance is due and so the payment allocation to principal increases and to interest decreases. That shift starts off slow at first - as I said, it's mathematical, not subjective.

Interest can't be prepaid in a mortgage so any amount in excess of a monthly payment MUST be applied to principal. It's not something to be "allowed" or "not allowed". If your normal mortgage payment is $2000 and one month you pay in $2500, $500 is applied to principal. No need to contact the lender, no need to do anything but pay it.

I can't comment on Debby's contribution because I'm not familiar with loans in Canada but if the principal was paid off early, I don't understand why any interest was due thereafter. I can't be sure but something seems off.

Mortgages have level payments throughout and of course the interest component is highest at the start because the balance outstanding is at its highest. As payments progress, less interest on the remaining balance is due and so the payment allocation to principal increases and to interest decreases.

Ahhhh! Makes perfect sense.

Interest can't be prepaid in a mortgage so any amount in excess of a monthly payment MUST be applied to principal. It's not something to be "allowed" or "not allowed". If your normal mortgage payment is $2000 and one month you pay in $2500, $500 is applied to principal. No need to contact the lender, no need to do anything but pay it.

I don't think that is true. I think you need to notify the lender of what you are doing. The best thing to do is read your mortgage contract.

When I had a mortgage there was a place to list extra principal and the instructions stated that you must enter an amount. I did not enter the amount and the next months payment amount was reduced by that amount. It may have only been that lender but I know that one did not automatically apply to principal which is why I wrote what I did. Only when the yearly escrow amount was calculated did the stated payment amount revert to any where near what it should be. I did wonder if I had only paid the $50 some dollars that was stated as the next payment would I have received a past due notice.

graywings...your correct. You have to tell the bank if your extra money is going towards principal or interest.

Not true. Maybe so with older mortgages years and years ago.

If you consider 2013 years and years ago perhaps but I think it is more the way the mortgage is written. Mine was through Chase after being sold several times.

I tend to overpay because I round up monthly payments slightly to avoid odd numbers. I never contacted a lender and all did as I described, including Chase and PNC. Maybe this varies by state or by region.

I think it is state by state Elmer because that is the way many lending laws are written.

I suspect those lending laws are pretty standardized now.

Here's an article form a national source. If you want the excess payment to go toward a future payment (with interest), you must let the lender know. Otherwise it goes to principle.

Example: You intend for your round the world tour to last three months, so you send the bank 3X your normal mortgage payment.

https://www.bankrate.com/mortgage/prepaying-your-mortgage/

" I think it is state by state Elmer because that is the way many lending laws are written. "

Do you know this to be true because of your own review of lending laws of many states?

There's so much federal legislation and regulation concerning banks,loans and loan prctices, commercial transactions, etc., that your comment suggesting wide variations from state to state surprises me.

Yes Elmer that was part of my last job. I did not suggest wide variations just one that I knew of.

no kidding, greywings, I know that. But when I add up my mortgage payments and subtract from what I bought my house for, that's pretty much the way it works out in the end. I wasn't saying it was a fact that that's how banks do it. I simply said that is pretty much how it goes. The first X years are pretty much all interest. The last few years you're finally paying for the house. In a round about way. Not exactly that way. ............

I found the Mortgage Professor many years ago and learned a lot from that site. Here is the link to various calculators on his site: https://www.mtgprofessor.com/calculators.htm

maifleur, I'll accept your comment on its face. There have been other things in the past I can recall you've mentioned where local laws or practices in your area were different from what I'd experienced in California and other states on both coasts so perhaps what you've described is another example of this?

Elmer just so you know I actually look at our states legislative session and what bills are proposed and voted on. It keeps me current at least on that. Occasionally there will be legal decisions that the Attorney General will release to the media. One of the last ones was a scam that involved this exact topic.

Edited to add that I hope you realize that some things almost always have local variations and while there may be federal laws there will also be state laws that pertain to things that the federal laws do not cover.

I spent only limited time in my career working with clients in a segment of the financial services industry and I don't consider myself to have a solid foundation in the specifics of the banking business.

I'll let my comments stand as is and accept your words about your area on their face for the reasons mentioned.