Making regular extra payments on the loan principal will provide enormous returns. Borrowers accomplish this goal in a few different ways. Making a single additional payment one time per year may be the easiest to arrange. If you can't pay an extra whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every other week. The result is you make one extra monthly payment every 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 extra every month or even every year. But remember that most mortgage contracts will allow you to make additional principal payments at any time. Whenever you come into extra cash, you can use this provision to make an additional one-time payment toward your principal.
If, for example, you receive a surprise windfall just a few years into your mortgage, you could pay this windfall toward your loan principal, resulting in huge savings and a shorter payback period. For most loans, even a small amount, paid early in the loan period, could offer big savings in interest and in the length of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.