Money saving idea: Advantage of longer term mortgage = easy earning

Today I would like to show you one interesting calculation related to mortgage payment. By this you can have another interesting earning source for your 10 Years Retirement Plan.

Below example shows case you want to use $200 000 mortgage with 2.3% interest for 30 years.

You can download excel sheet for calculation here: 2018_mortgage_calculation

Main target of today’s calculation is to show you prove that 30 years mortgage is better than 20 years one.

Now you probably think I am crazy, because this is not what everybody say, right? But just give me few minutes and I think you will agree with me.

If you will finish with reading of this article you will be able to understand how you can earn more than $100 000 within next 20 years.

The first main point is that you don’t spend money you save every month ($256 which is difference between 20 year’s mortgage monthly payment – $1 043 and 30 year’s mortgage monthly payment – $788), but instead of this you use those money for investment. This is the major point for my consideration. You have to show high level of self control not to spend money you save every month by mortgage payment difference.

On the other hand, I believe you have no problem with this as you want to retire early.

So let’s consider you use all those money for investing. My example use stock investment as this is my preferred investment way.

Stock investment ratio is set as 10% per year (based on long term average return of S&P500 which is 8,7%), so in case you are better than “average investor” you should reach 10% yearly return.

I have long term return average of 20,7% per year (my list contains companies like ALIBABA, SINA, MOMO, FACEBOOK, GOOGLE, WESTERN DIGITAL etc.) so I know 10% is realistic image for other investors.

So here are all inputs:

Mortgage $200 000

Mortgage – percent of interest (p.a.) 2,3% (how much you pay to Bank)

Stock invest ratio (based on S&P500) 10% (how much you earn by investing)

You can modify those inputs by yourself (just put your numbers), all other calculation are made automatically.

Results of my (your) calculation are showed like this:

Important outputs: 

Monthly payment in case of 30 years mortgage -> $1 043

Monthly payment in case of 20 years mortgage -> $788

Difference -> $256

Totally earned by stock investing after 20 years -> $177 547

Remaining payment after 20 years -> $76 954 (shows how much you still have to pay to your Bank)

Earned -> $100 593

Details of this calculation you can see here  -> 2018_mortgage_calculation

So as you see 30 years mortgage is having benefit compare to 20 years mortgage as you can invest your money.

In our case you can earn $100 593 within 20 years.


In case you like today’s article please share it with others, so more people can enjoy early retirement.

Thank you for reading.


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