October 2, 2014

How Fast is a Mortgage Normally Paid Down?

We've got a couple mortgages that we only recently got within the past few years.    The mortgages are both 30 year notes and so I'll still owe on them when I'm in my 60's and past retirement age.   I was curious how much I'd owe on the mortgages so I used the calculator at Mortgagecalculator.org to generate amortization tables.   

One might assume that when you're 15 years into a 30 year mortgage that you'd have it half paid down.  But thats not now it works.   Mortgages payments are mostly interest at the start and little principal is paid initially.   Then as the principal gradually wears down over the years when you get to the end of the original term the opposite is true and most of your payments are principal and (relatively) little interest is paid.

You can see the data below but roughly speaking, for a 4% loan you've paid down just 10% in the first 6 years, 20% in 10 years, 1/3 is paid off by 15 year point and 50% is paid off in 20 years then by the 24th year you've paid down 2/3.

I'm measuring the amounts in the % of original loan that is still owed.    So in the 1st year you still owe nearly all of the loan so its 99-100% (rounded).     I'm assuming the normal amortization repayment rate here and if you paid extra principal into the loan at any point that would accelerate the repayment and change the curve.

The 30 year mortgage pay off rates are shown in graphic form :




Here's a table for a 30 year mortgage at varying interest rates :


Year 4% 5% 6% 7% 8%
1 99% 100% 100% 100% 100%
2 98% 98% 98% 99% 99%
3 96% 96% 97% 98% 98%
4 94% 95% 96% 96% 97%
5 92% 93% 94% 95% 96%
6 90% 91% 93% 94% 95%
7 88% 89% 91% 92% 93%
8 85% 87% 89% 91% 92%
9 83% 85% 87% 89% 91%
10 80% 83% 85% 87% 89%
11 78% 81% 83% 85% 87%
12 75% 78% 81% 83% 85%
13 72% 75% 78% 81% 83%
14 70% 73% 76% 78% 81%
15 67% 70% 73% 76% 79%
16 63% 67% 70% 73% 76%
17 60% 64% 67% 70% 73%
18 57% 60% 64% 67% 70%
19 53% 57% 60% 64% 67%
20 50% 53% 57% 60% 63%
21 46% 49% 53% 56% 59%
22 42% 45% 49% 52% 55%
23 38% 41% 44% 47% 50%
24 33% 36% 39% 42% 45%
25 29% 32% 34% 37% 40%
26 24% 27% 29% 32% 34%
27 20% 22% 24% 26% 28%
28 14% 16% 18% 19% 21%
29 9% 10% 11% 13% 14%
30 4% 4% 5% 5% 6%
31 0% 0% 0% 0% 0%


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