Paying regular additional payments on your loan principal provides huge returns. Borrowers can accomplish this in several ways. For many people,Perhaps the simplest way to keep track is to make one additional payment every year. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgages will allow additional payments at any time. You can benefit from this rule to pay extra on your principal any time you come into extra money. Here's an example: a few years after buying your home, you receive a huge tax refund,a very large legacy, or a cash gift; , investing a few thousand dollars into your home's principal can reduce the repayment period of your loan and save a huge amount on mortgage interest paid over the duration of the loan. Unless the loan is very large, even modest amounts applied early in the loan period can produce huge savings over the duration of the loan.
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