Are you facing retirement in a few years? Do you really want to be paying a mortgage when you retire? Here’s a plan that will allow you to be mortgage free when you retire. Let’s say you have recently obtained a mortgage and you plan to retire in 12 years. Let’s use our earlier example, but change the dates for simplicity. You started your mortgage in January of 2007. Its now November of 2009 and you want to have the mortgage paid off by November 2021, the month you plan on retiring. Using our earlier example, you see our mortgage balance at the end of October 2009 is $240,801.25. In order for the mortgage to be paid off by November of 2021, you will have to add a prepayment of $850.00 a month. The new monthly total will be $2,348.88 ($1,498.88 + $850.00)

Summary

Total interest if not prepaid $289,593.09

Total interest if prepaid $139,407.49

Total amount saved prepaying $150,187.98

Number of months saved prepaying 181