Making regular extra payments on your loan principal yields singificant savings. Borrowers pay extra in several ways. Paying 1 extra payment one time per year may be the easiest to keep track of. Of course, some people won't be able to afford such a large additional expense, so splitting a single additional payment into 12 additional monthly payments is a fine option too. Another popular option is to pay half of your payment every other week. The result is you will make one additional monthly payment in a year. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly reduce the duration 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. Keep in mind that almost all mortgages will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this rule to pay down your mortgage principal when you come into extra money.
For example: a few years after moving into your home, you receive a larger than expected tax refund,a large legacy, or a cash gift; , investing several thousand dollars into your mortgage principal will reduce the repayment duration of your loan and save enormously on mortgage interest over the duration of the loan. Unless the loan is very large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.
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