Paying 5k Principal with a credit card.

[B_Slow1]

I can see what the OP is thinking... but there isn’t enough info to go on. As others stated, we don’t know what his mortgage rate is, and I don’t know what the up-front fees would cost him.

But, over the course of what would be a 26-year mortgage commitment, the money saved on interest payments could still be worth it. He’d be paying less interest monthly than he otherwise would, and would likely complete repayment several months ahead of schedule, which saves him money. Over 20-something years, those savings may be greater than some up front fees. But I don’t know anything about Plastiq or similar services.

[CreditCuriosity]

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@B_Slow1 wrote:

I can see what the OP is thinking... but thereisn’tt enough info to go on. As others stated, wedon’tt know what his mortgage rate is, and Idon’tt know what the up-front fees would cost him.

But, over the course of what would be a 26-year mortgage commitment, the money saved on interest payments could still be worth it.He’dd be paying less interest monthly than he otherwise would, and would likely complete repayment several months ahead of schedule, which saves him money. Over 20-something years, those savings may be greater than some up front fees. But Idon’tt know anything aboutPlastiqq or similar services.

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I managed to back into his rate assuming 150k interest at 107k mortgage w/27 years left would put OP at 7.8 interest.  My charts above were figuring 7%.  Anyways OP is gone and so am I for the day to run errands 

[Horseshoez]

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@B_Slow1 wrote:

I can see what the OP is thinking... but there isn’t enough info to go on. As others stated, we don’t know what his mortgage rate is, and I don’t know what the up-front fees would cost him.

But, over the course of what would be a 26-year mortgage commitment, the money saved on interest payments could still be worth it. He’d be paying less interest monthly than he otherwise would, and would likely complete repayment several months ahead of schedule, which saves him money. Over 20-something years, those savings may be greater than some up front fees. But I don’t know anything about Plastiq or similar services.

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The point you're missing is the future value of today's $5,000; properly invested it will return many times the amount of interest the OP would have paid over the remaining life of the mortgage.

[longtimelurker]

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@Horseshoez wrote:

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@B_Slow1 wrote:

I can see what the OP is thinking... but there isn’t enough info to go on. As others stated, we don’t know what his mortgage rate is, and I don’t know what the up-front fees would cost him.

But, over the course of what would be a 26-year mortgage commitment, the money saved on interest payments could still be worth it. He’d be paying less interest monthly than he otherwise would, and would likely complete repayment several months ahead of schedule, which saves him money. Over 20-something years, those savings may be greater than some up front fees. But I don’t know anything about Plastiq or similar services.

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The point you're missing is the future value of today's $5,000; properly invested it will return many times the amount of interest the OP would have paid over the remaining life of the mortgage.

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That was my thought, and also applies to the fees to a smaller extent, paying unnecessary fees now has a real cost, that could negate some of the savings twenty years from now for example.

When mortage rates are still fairly low (and/or savings interest is high) it doesn't make financial sense to prepay.   It may make some psychological sense (that $5K is paid off and you don't have to worry about market returns) perhaps most when entering retirement when having no mortgage debt has a big comfort value.

[Kforce]

Doing some back calc math I guessed  (Real numbers not known)

*

Maybe an original loan near $112,00 @ 8% for 30-year and  ~ $822/mo payments.

That would leave

$107,000 / 8% / 822/mo for 26 more years = ~143k interest left to pay
with $5,000 paid to principal it would reduce the interest paid to = ~115k

A saving of  ~$28k, not 150k but real savings

The part that makes no sense to me is that if OP has the funds

to pay just shy of $400 in fees and $5,000 back in 3.5 months.

Why not just make four $1,400 principal payments and avoid all fees. ?

[SouthJamaica]

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@Joesun12 wrote:

Yes yes I know its difficult but here's my Idea I want to pay with Plastiq 5 thousand principal only, once on a credit card then I will transfer to a O percent card which I can pay it off in 3.5 months. The problem s I don't know how to do it lol has anyone here ever done it like this before please no jokes I know how ya'll can be.

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You open an account with Plastiq online.

You add the company you want to pay as a vendor.

You link a credit card, and make the payment.

[CreditCuriosity]

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@Kforce wrote:

Doing some back calc math I guessed  (Real numbers not known)

*

Maybe an original loan near $112,00 @ 8% for 30-year and  ~ $822/mo payments.

That would leave

$107,000 / 8% / 822/mo for 26 more years = ~143k interest left to pay
with $5,000 paid to principal it would reduce the interest paid to = ~115k

A saving of  ~$28k, not 150k but real savings

The part that makes no sense to me is that if OP has the funds

to pay just shy of $400 in fees and $5,000 back in 3.5 months.

Why not just make four $1,400 principal payments and avoid all fees. ?

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^ This.  You understand it and explained it out and your logic is sound although would have to run your math.  Really 28k for 5k?  8% interest is nasty over 26-27 years.  I wish OP would just of stated interest but around 7.6-8 percent I think we all land around that area.  

[longtimelurker]

I think those figures aren't quite right.     Interest paid on $5000 at 8% for 26 years is about $6,900   (Or, to be safe, running @Kforce $112K for 26 years at 8% vs $107K for 26 years at 8% yields the same ~ $7000

[Kforce]

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@longtimelurker wrote:

I think those figures aren't quite right.     Interest paid on $5000 at 8% for 26 years is about $6,900   (Or, to be safe, running @Kforce $112K for 26 years at 8% vs $107K for 26 years at 8% yields the same ~ $7000

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I put in the numbers again and got the same results.

Loan Amoritization & Future Value Calculators

Need to use loan amount, rate and a fixed payment

And then with same payment, interest just 5000 less debt

If you threw the 5k+ fees into an investment/savings with 8% APR for 26 years

$42,728 - $5,375 = gain  $37,353

Again the $5,375, this time interest just 1st each year, not monthly.

[longtimelurker]

Oh, OK you are using same payment.   I was just doing standard amortization, so the lower amount leads to a smaller payment and thus less savings.   Your approach makes sense.