Build A Retirement Pot With Mortgage Payments, A Mortgage Overpayment Calculator Can Show You How | Mortgage

Build A Retirement Pot With Mortgage Payments, A Mortgage Overpayment Calculator Can Show You How

by MontyBurn

First off, let's explain what a mortgage overpayment calculator is. It's just a little bit of software on a web page or even a spreadsheet that lets you put in your mortgage figures and it tells you what you can save by overpaying a bit every month.

How can it help build a retirement pot? It shows you how much you would save in cash and how many years you can shave of the mortgage term.

Any money saved and any money you would be normally paying in the knocked off years goes into the pot for your retirement.

OK, down to facts and figures. A mortgage overpayment calculator lets you input all your mortgage related figures, like the amount borrowed and the interest rate and the length of the mortgage.

Now you put your figure in for the overpayment. This can be anything you can afford. Try different figures for different results and see what you could save.

When you put the figures in you get out an amount of cash you will save and a number of years knocked off the mortgage.

What do we mean by that? Well, if you put a certain set of figures in for a 25 year mortgage the calculator might tell you that you could save 15 or 20 grand and knock 5 years off the mortgage.

The result of course depends on what situation you are in. A 25 year, 100,000 mortgage at 5% interest could be shortened by 6 years and save you 20,000 just by paying an extra 100 every month.

This means your mortgage is done with in 19 years instead of 25 and you save 20 grand. How does this enhance a retirement fund you might ask?

For the final 6 years you aren't having to make payment but you did originally expect to. So why not?

Continue to pay for the last six years on the above example and you have 6 times 12 which is 72 payments of 685 (your old payments) which amounts to a whopping 50 grand.

In the beginning you were happy to pay for 25 years so keep paying and this time the savings are yours. You could end up with 50,000.

Then when you arrive at the 25 year mark you have a nice little nest egg in the bank. Which is all yours and not the lenders.

Finding an extra 100 per month in the early years (at least for our example) would be hard for some but as the years go by it becomes easier to find every month. And just think of what awaits you at the finish line.

You can have a play around with a mortgage overpayment calculator on my site. I'm positive the savings you could make will surprise you.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

Monty Burn published a bestseller called the Mortgage Bible, grab your FREE copy at his website Mortgage Watchdog or have a tinker with the mortgage overpayment calculator and shock yourself at how much money you could save.