Paying consistent extra payments on the loan principal provides big savings. You pay more on principal by employing various techniques. Paying 1 additional full payment once a year is likely the easiest to arrange. However, many folks will not be able to swing such an enormous extra expense, so splitting an extra payment into 12 extra monthly payments works too. Another very popular option is to pay a half payment every other week. The effect here is that you make one additional monthly payment in a year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all 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 most mortgage contracts will allow you to pay extra on your principal at any time. You can take advantage of this rule to pay extra on your mortgage principal when you get some extra money.
Here's an example: a few years after moving into your home, you get a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal can shorten the period of your loan and save enormously on mortgage interest paid over the duration of the loan. For most loans, even a small amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.
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