Based on a request from a reader, I’m posting this follow up to my initial list of 10 must use online mortgage calculators. This time, the focus is on how to better manage your mortgage debt by analyzing the impact of prepayments.
1) Increase the monthly payment or make a lump sum prepayment?
Can’t decide between a lump sum payment, or increasing the monthly payment? Use one of these calculators to see which prepayment option gives you the most bang for your extra buck.
Mackenzie Financial’s calculator lets you input all the factors, allowing you to see what type of prepayment will have the greatest impact.
Callum Ross, a mortgage broker in the Greater Toronto Area, provides this online calculator.
Centum’s mortgage analyzer provides a great graphical overview if you want to make regular prepayments (you can choose between regular monthly, yearly or one-time payments).
2) Paydown date
Do you know the year you want to be debt free? This calculator from Fiscalagents.com allows you to input the mortgage amount and basic terms and calculates what you’ll need to be free based on your desired debt free year.
For pencil and paper types, use the following formula:
How much you save = X * ((1 + I) ** N) – X
X = the lump sum payment
I = interest rate
N = number of year
Or, if you want a bit more detail, try Vertex 42’s free Excel spreadsheet that helps you analyze different aspects of your mortgage, including prepayments. Download it of the Vertex42.com website.