Mortgage: prepay vs. keep the cash

Prepaying a mortgage saves interest, and that saving is easy to see. What it costs — the liquidity you hand over — is easy to forget. This tool gives a rough one-year interest saving on the amount you prepay, then shows how far your remaining cash stretches against your essential spending. Saving on interest is visible; the flexibility you trade away is not.

Result

Prepay 20,000, and as a rough estimate (balance × annual rate) you save about 700 of interest in the first year. But afterward your cash drops from 35,000 to 15,000, which at 2,500 of essentials a month covers only about 6.0 months. The saving is visible; what you trade away is liquidity.

Lump-sum prepayment: 20,000
Interest saved in year 1 (approx.): 700
Cash left after prepaying: 15,000
Remaining cash covers: 6.0 months

Where your cash goes when you prepay: into the mortgage vs. kept liquid.

A simplified estimate from your inputs, not advice to prepay.

Assumptions & limits

The interest saving is a first-order estimate; whether prepaying shortens the term or lowers the payment, and by how much, follows your loan schedule. In a job loss, liquidity may matter more than the saving.