If you make 2 mortgage payments a year, how fast can you pay off a 30 year mortgage?

Question

I heard you take 7 years off a mortgage if you make one extra payment. I was wondering how many years you save if you make 2 payments.

Answer 1

It depends on your payments and the total cost of the house. Can't be more specific than that, sorry. Not enough info.

Answer 2

Did you mean, you'll make two extra payments over the 12 monthly payments you're expected to send?

Some of our Y!Users are right: It depends on how much per extra payment you'll be sending to the lender. In addition, these extra payments must memo the lender to apply it towards the principal - not split it between principal and interest.

A general scenario would be:
(1) If you recently refinanced to a lower interest rate (1% and more);
(2) You consolidated all your debts;
(3) You have an effective lower monthly mortgage payments spread over 30 years;
(4) The savings you received between your previous and current mortgage is being alloted towards your current principal mortgage payment (monthly, semi-annual or annual), instructing the lender to apply these payments toward the principal only;
(5) You will definitely pay-off your loan much earlier; but like some of our Y!Users said, you need your Mortgage Payment Chart to be able to see how fast you're paying off and how much savings you're getting.

Answer 3

It depends on the size of the payments you make. The idea is to reduce the interest you pay so the bigger the repayment the more you save. I would suggest you make one capital repayment of as large a sum as you can afford each year. Speak to your lender to find out the best time of year to make the payment to optimise your saving.
I have a flexible mortgage and can make additional payments any time. However, if I make more than two a year an admin charge is payable you may find a similar situation applies to your mortgage so check it out. I have reduced by mortgage so that I only have 4 more years to pay it off.

Answer 4

2 'extra' payments!?! I don't know the calculation but it's not 14 if that's what you're thinking. You save a lot in interest payments for sure and it's true that it takes years off your mortgage. My 25 year mortgage is reduced to 17.5 with one extra payment a year. Every little bit you can put into it will be to your advantage for sure. Ever heard of Dave Ramsey? Check out his website and catch his radio show if you can.

Answer 5

Well if you make two payments a month then just divide...30 yrs by 2 so it will take you 15 years. Cuz if you make 1 payment a month thats 12 months 12 payments....

12 (payments) * 30 (years) = 360 payments

24 (payments) * 15 (years) = 360 payments (The Same)

Answer 6

It depends on the interest rate (only the interest rate).
The 7 yr figure was talked about back when rates were higher.
Anyway, here are some examples.

@5% 1 extra gets it paid on the 305th payment (25yr 4mo)
2 extra pays it on the 264th payment (22yr 0mo)

6% 1 extra: 297th (24yr 9mo)
2 extra: 253rd (21yr 1mo)

7% 1 extra: 288th (24yr 0mo)
2 extra: 241st (20 yr 1mo)

8% 1 extra: 277th (23yr 1mo) -- there is your 7 yrs.
2 extra: 229th (19yr 1mo)

Assumptions used:
The extra payments are made on the 6th and/or 12th month of each year. If they were made at the beginning of each period the time would be shorter.
No allowance made for any additional charges (taxes, insurance, fees, penalties, or whatever), being included with principal.

The final payment may be a bit less than your regular payment.
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This answer has been edited to reflect more precise calculations.

Answer 7

I would think 15. If one extra a year is 7, then 2 extra a year would be 14. BUT the more you pay to principal, the more of your payment goes to principal.

Answer 8

you could qualify for an FHA mortgage that calls for an extremely low down price - once you've a good credit status. To get those 800+ ratings you want to pay your mastercard expenditures in complete each month. you could do this. pay off those charge playing cards and keep a ton in interest. Then, proceed utilising your card for things you want like gas, and pay in complete even as the bill is offered in. in no way wearing a stability or paying interest. in no way close your oldest mastercard account - even with if this is paid off. length of credit heritage is 15% of your fico score do not close previous charge playing cards - banks favor to ensure an excellent type of unused credit. at the on the spot are not making any new "huge" loans 18 months formerly paying for your position. do not open any new charge playing cards 6 months formerly purchase. Any mastercard debt will right now decrease the quantity you'll qualify for in a month-to-month mortgage price. Pay those playing cards off - wearing balances is in ordinary words hurting you. /

Answer 9

it really depends on how much you pay to principal in extra payments. if you pay $100K extra, then the loan would be done in no time.

Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.

Answer 10

Then you better be making two mortgage payments PER MONTH, not per year, as you said.