Cashflow and Compounding
Compounding
Compounding and mortgages
This table shows that $5,000 per annum over a 12 year time frame results in a mortgage balance difference of approximately $87,000 ($98,000 – $11,000).
It is important to note that this is much greater than 12 X $5,000, or $60,000.
The additional benefit of $27,000 is an outcome of interest savings over the years, which in turn means each repayment pays off more and more of the capital amount owing.
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