Paying consistent extra payments on the loan principal provides huge returns. Borrowers can accomplish this in several ways. Making 1 additional payment once every year is perhaps the simplest to arrange. Of course, some people won't be able to pull off such an enormous extra payment, so splitting one additional payment into twelve extra monthly payments is a great option too. Another very popular option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment every year. These options differ slightly in reducing the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some folks just can't make extra payments. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. You can take advantage of this rule to pay down your mortgage principal any time you come into extra money. Here's an example: five years after buying your home, you receive a huge tax refund,a very large legacy, or a cash gift; , you could apply this windfall toward your loan principal, which would result in significant savings and a shortened payback period. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
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