Making consistent additional payments on your principal balance yields singificant savings. You can accomplish this in various ways. Paying a single additional payment once a year may be the simplest to track. But many folks will not be able to pull off this huge extra payment, so dividing a single extra payment into twelve additional monthly payments is a fine option too. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment every year. These options differ a little in lowering the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay extra every month or even every year. Keep in mind that most mortgages will permit you to make additional payments to your principal at any point during repayment. You can benefit from this rule to pay extra on your principal any time you get some extra money. If, for example, you were to receive a very large gift or tax refund five years into your mortgage, you could apply this windfall toward your loan principal, which would result in enormous savings and a shortened payback period. For most loans, even a relatively small amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
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