Making consistent additional payments on your loan principal can yield enormous savings. Borrowers can accomplish this using a few different techniques. For many people,Perhaps the simplest way to organize this process is by making one extra payment every year. However, some folks will not be able to afford such a large extra expense, so dividing an extra payment into 12 additional monthly payments is a great option too. Finally, you can pay a half payment every two weeks. Each option produces slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgages allow you to make additional principal payments at any time. You can take advantage of this provision to pay down your mortgage principal when you come into extra money. If, for example, you were to receive an unexpected windfall just a few years into your mortgage, you could apply a portion of this money toward your loan principal, which would result in significant savings and a shorter payback period. Unless the loan is very large, even modest amounts applied early in the loan period can yield huge savings over the life of the loan.
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