Making regular additional payments toward the principal balance provides huge savings. Borrowers make this happen in several different ways. For many people,Perhaps the simplest way to organize this process is to make 1 extra mortgage payment a year. But some folks won't be able to pull off such a large extra expense, so dividing one additional payment into twelve extra monthly payments is a great option too. Another popular option is to pay half of your payment every two weeks. The effect here is that you will make one extra monthly payment in a year. Each option produces slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgage contracts allow you to make additional payments at any time. You can benefit from this provision to pay down your mortgage principal any time you come into extra money.
If, for example, you receive a very large gift or tax refund five years into your mortgage, you could pay this money toward your mortgage loan principal, which would result in significant savings and a shortened loan period. Unless the loan is very large, even modest amounts applied early in the loan period can produce huge savings over the life of the loan.
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