Cashflow and 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.