Making regular additional payments on the loan principal can yield singificant returns. People accomplish this goal in a few ways. Making a single extra payment once per year may be the simplest to arrange. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Another popular option is to pay half of your payment every other week. The result is you make one additional monthly payment in a year. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
Some folks can't manage extra payments. But you should remember that most mortgages will allow you to make additional principal payments at any time. Any time you come into unexpected money, you can use this provision to make a one-time additional payment on your mortgage principal.
For example: a few years after buying your home, you get a huge tax refund,a very large legacy, or a cash gift; , investing a few thousand dollars into your mortgage principal can reduce the duration of your loan and save enormously on interest over the duration of the mortgage loan. For most loans, even a modest amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
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