Making regular extra payments toward the principal balance will yield enormous savings. You pay more on principal by employing various techniques. Making one extra payment once every year is perhaps the easiest to keep track of. But some folks won't be able to afford this huge extra expense, so dividing one additional payment into 12 extra monthly payments is a fine option too. Another option is to pay a half payment every two weeks. The result is you make one additional monthly payment in a year. Each option yields different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage extra payments. Remember that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. You can benefit from this rule to pay extra on your mortgage principal when you get some extra money.
Here's an example: a few years after buying your home, you get a larger than expected tax refund,a large inheritance, or a cash gift; , you could apply a portion of this money toward your mortgage loan principal, resulting in huge savings and a shortened payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.
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