Mortgage interest when selling house

Tomask55

Hi,

I have a question which is killing me now...

Do you pay less interest if you sell house before mortgage is paid off?

for example house is 250k and credit cost for 30 years is 120k.

let’s say, after 10 years deciding to sell the house.

will the credit cost of 120k needs to be paid fully or the amount will be smaller if i have decided to pay it quicker than 30 years?

Allinall

Unless you are on a fixed rate, with a penalty for paying off early, then you stop paying interest as soon as you pay off the mortgage.

Tomask55

so it means that instead of 370k mortgage (250k house + 120k credit cost) which was given by the bank in the beginning for 30 years, i will pay smaller credit cost (not 120k) just because i will pay it quicker, am i right?

Geuze

YES, obviously.

If you repay any mortgage quicker than planned, you save interest.

This is why many people overpay their mortgage.

Geuze

Think of the interest as the monthly bill for borrowing.

If you stop borrowing, you stop paying interest.

Jim2007

https://www.boards.ie/discussion/comment/118172707#Comment_118172707

Since the bank needed to give their permission for the sale they will have recalculated your mortgage as if it was only for 10 years rather than 30 years as in your question. So their calculation of the amount outstanding will include:

• The capital amount borrowed
• The interest for a 10 year mortgage (not 30)
• The penalties for breaking the loan agreement early
• Any additional expenses the bank incurred in the process

So the total amount that will have to be paid over to the bank will be a bit more than what you’ve paid if you had only taken a 10 mortgage, because of the penalties and expenses.