Making regular additional payments on the principal balance can yield huge savings. Borrowers pay extra in several different ways. Making 1 additional full payment one time a year is likely the simplest to keep track of. Of course, many people can't afford such an enormous additional expense, so splitting one extra payment into 12 extra monthly payments is a fine option too. Another popular option is to pay a half payment every other week. The result is you make one additional monthly payment in a year. These options differ a little in reducing the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any time. Any time you get some unexpected cash, you can use this rule to make an additional one-time payment on mortgage principal.
For example: a few years after moving into your home, you get a very large tax refund,a very large inheritance, or a cash gift; , paying several thousand dollars into your mortgage principal can significantly reduce the repayment duration of your loan and save enormously on mortgage interest over the duration of the mortgage loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
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