Paying regular extra payments on the principal will yield huge returns. Borrowers can pay against principal in various ways. Paying a single extra full payment once a year is likely the simplest to track. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each option produces different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some borrowers just can't make any extra payments. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any time. Any time you get some extra cash, consider using this rule to pay a one-time additional payment toward your mortgage principal.
If, for example, you receive a very large gift or tax refund five years into your mortgage, you could pay this windfall toward your mortgage loan principal, resulting in enormous savings and a shorter payback period. For most loans, even a small amount, paid early enough in the loan period, could offer big savings in interest and in the length of the loan.
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