Mortgage Payoff Calculator: How to Pay Off Mortgage in 5 Years

Let's plug these numbers into the early mortgage payoff calculator. If you make one $1,610 payment a year, that's roughly equivalent to an extra $134 a month ($1,610/12 months). We simply enter those numbers into the tool...

And as you can see, if you pay an extra $1,610 a year on your $300,000 mortgage, you'll pay off your mortgage 5 years early AND save over $50,000 in interest payments! Isn't that just insane?

Again, if we just plug these numbers into the early mortgage payoff calculator...

If you pay an extra $3,220 a year on your $300,000 mortgage, you'll pay off your mortgage 8 years early AND save over $85,000 in interest payments! Sounding pretty good right?

Now that I have your wheels turning...let's start thinking about that 5 year mark again. Could you actually pay off your house in just 5 years?? (It's possible. We're building up to what that would take.)

Let's follow the above example. That you took out a $300,000 mortgage seven years ago and have always made the standard payments. Based on the tool, you'd still have $263,832 of principle yet to pay. So let's put in the entries and see what the impact is now!

Honestly, it's still pretty impressive! Even if you had your mortgage for 7 years and decide to start paying an extra $200 a month, you could still save over four years on your mortgage and over $37,000 in interest payments!

This is such an awesome part of this tool. Sorry... I don't mean to over-sell you on this thing. I just get so excited about it! Let's go back to the initial example of making 1 extra mortgage payment a year on your $300,000 mortgage.

What if, instead of making one extra mortgage payment, you just wanted to pay off your mortgage in 5 years? How much extra would you need to pay per month?

And the tool says.... $4,050.87. So, if you'd like to pay off your $300,000 mortgage in five years vs. the traditional 30 years, you'll need to pay the standard payment of $1,610.50plus the extra monthly payment of $4,050.87. That's a total of $5,661.37 each month.

Sounds like a ton, but did you see how much interest this would save you?? $240,069! Nowthat's a hefty savings! If you could buckle down and pay off your 30 year mortgage in five years, you'd be so far ahead of the game financially, it would be eye-popping!

What if your mortgage isn't $300k? What if you recently took out a $150k mortgage? How much would it take to pay off a $150k mortgage in 5 years?

To pay off a $150k mortgage in 5 years, you'd need to contribute an extra $2,025 a month to your regular mortgage payments!

If you have a $200k mortgage at 5% interest for 30 years, how much extra would you need to pay per month to pay it off in 5 years?

To pay off a $200k mortgage in 5 years, you'd need to contribute an extra $2,700 a month to your regular mortgage payments!

If you have a $250k mortgage at 5% interest for 30 years, how much extra would you need to pay per month to pay it off in 5 years?

To pay off a $200k mortgage in 5 years, you'd need to contribute an extra $3,375 a month to your regular mortgage payments!

If you have a $300k mortgage at 5% interest for 30 years, how much extra would you need to pay per month to pay it off in 5 years? (We already did this one near the beginning of this post, but let's make sure we answer the specific question here for anyone that's quickly searching for it!)

To pay off a $300k mortgage in 5 years, you'd need to contribute an extra $4,050 a month to your regular mortgage payments!

Before doing anything with your money, you should start to save up a decent sum into a simple savings account. This is called your emergency fund. At any given time, you could...

• lose your job

• get injured and not be able to work

• get divorced

• have a kid break an arm

• have a relative pass away, which means you have to travel across the country to be at the funeral

Anything can happen! Life is fragile and you should be ready with a minimum of 3 months' worth of expenses in a savings account - accessible at any moments notice. If you want to pay off your house early, first start with saving up a simple emergency fund, ideally with high yield savings account.

If you have...

• payday loans

• credit card debt

• personal loans

• medical debt

• car loans

• student loans.

...basically anything that's not a home mortgage debt, you're going to want to tackle that first (I recommend the debt snowball for a tool to get out of debt). Why? Because a home typically goes up in value. Any of the items above will not go up in value. And, the items above are likely a lower dollar amount, so you can pay them off much faster than you could a house. All great reasons to tackle the above list first and the home mortgage last.

What I did was use a debt snowball template (offered for free if you follow the link).

• I lined up my debts from smallest to largest

• I entered the interest rates and the minimum payments

• Then, the tool showed me how quickly (or slowly) I would pay off all my debt

• If I didn't like the answer I saw, I could see what adding extra payments would do to the payoff timeframe (it's amazing what a few hundreds bucks can do each month!)

(Want to know how to find the extra money? Skip ahead to #7 for some tactical advice.)

Once you're out of consumer debt, I recommend that you contribute to retirement if you haven't started already (at least 15% of your income, but 20% or 25% is better). After all, when you're old, you're going to want money so you can eat and pay your heating bills. Having a paid-for house with no retirement savings doesn't help you with food or gas bills...

Now that you have an emergency fund, no consumer debt, and you're contributing to your retirement fund, it's time to think about paying off your mortgage early. But, before you do that, ask yourself why it's important to be mortgage free.

• Do you just hate owing money to someone else?

• Would you like to stop paying all that interest to the bank?

• Do you want to get rid of your mortgage so you can invest more?

• Or, maybe you just hate the idea of having a mortgage payment in retirement?

Whatever your reason is, is it really enough of a reason to put extra money toward a mortgage for years to come? Is your reason big enough to drive you to take on extra jobs or cut back on your expenses each month?

If it is, then go ahead and do it. Pay off your mortgage early. If your reason isn't enough to move you, then don't do it. It won't be worth it for you financially. You're better off just putting more money in your retirement and keep making regular payments on your mortgage.

If you're certain you want to tackle your mortgage debt and get it out of your life, then the next thing you need to know is when. When do you want to be mortgage free? Do you want to know how to pay off your mortgage in 5 years? Or maybe you want to be completely debt free by 40?

Whatever it is, make it your goal! Then, figure out what it's going to take to achieve that financial goal!

Let's say you want to pay off your $300,000 mortgage in five years. That means you're going to need an extra $4,050.87 a month to put toward the principle each month.

Sounds like a lot, but you know what? Now that you know the answer to your question, you at least have a target to shoot for. Now it's up to your brain to figure out how to make it happen. And, you may not think it, but your brain is anamazingly powerful muscle.

If you want to pay off your mortgage bad enough, your brain can discover how to earn that additional $4k a month! I've been there. Trust me. It's possible.

Want a more tactical plan for paying off your mortgage early? Want to know what exactly you can do to hit your monthly mortgage payment target every month?

There are two main areas to look into. Cut back on spend, and earn more.

Cut back on spend

Let's say that you spend $5,000 a month. What are you spending all that money on? If you tried to write down everything that made up that $5,000, I bet you could only come up with $3,500...max. So where is the other $1,500 going? That's what you're going to have to figure out.

• Print out your bank statements and credit card statements over the last 6 months.

• What did you spend your money on?

• Were they necessities? Or did you just piddle your money away?

Chances are, you spent some money foolishly, and then you overspent on the rest.

• Did you buy some new stuff last month? Could you have bought used? Could you have done without?

• What do you pay for your phone each month? What if you downgraded your phone or went with a different provider? How much could you save?

• Do you still pay for cable? Do you really need it?

• You probably have two cars. Is that really necessary? How much could you save if you just had one family car (under $5000)?

• Do you go out to eat often? What if you stopped that? You could be healthier AND you could save money!

If you really want to get rid of your mortgage in five years, you've got to start thinking radically here! What if you really could get that $5,000 spend down to $3,500? That would mean you could put $1,500 toward your mortgage principle each month! That's nearly half way to $4,000 (if that was your goal)!

Earn more

This is the second side the equation. Earning more. How can you earn more so you can pay off your mortgage faster? There are three main ways to earn more:

• Earn more at your job (via a raise or promotion)

• Earn more with a side hustle

• And, investing money to earn money via passive income (like real estate)

The third option probably isn't the best in this situation since you're looking to throw a bunch of money at your mortgage, and fast! There's no sense saving up a bunch of money to invest it and then earn just a small sum each month. While it's a great investment option, it just doesn't make sense here, so let's not dive into it.

The first option was earning more at your job. How can you do this?

If you feel that you're underpaid as it stands, gather up some data that proves it, tell your employer you like them and don't want to have any reason to look elsewhere, and ask for a raise. It's pretty much as simple as that. If you're not yet worth more than what you're paid, then you'd better make yourself more valuable.

Look for opportunities in your company - areas where you could make a real difference by cutting company costs or earning greater revenues. If you start doing this, you'll get noticed and you'll either get a promotion, or you'll get yourself into a position to earn more money.

The second option was to earn more with a side gig. How can you do this?

First, think about what you like to do and what you're good at. Second, think about how to earn money with it.

• If you like to get exercise and love the smell of freshly cut grass, then start mowing lawns.

• If you like building things out of wood, start to contract out your services

• Or, maybe you like building websites. Start doing that for companies in your area. There are SO MANY companies that could use better websites! They just don't know where to look!

The ideas are endless. My side hustle is this blog. Who would have thought that putting words on a virtual page could be so lucrative? Not me!