Making consistent extra payments toward the loan principal will yield big returns. People use different methods to meet this goal. Making 1 additional payment one time every year is perhaps the simplest to arrange. Of course, many folks won't be able to afford such a large additional expense, so splitting one additional payment into 12 extra monthly payments works as well. Another popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment each year. Each of these options produces slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks can't manage extra payments. But remember that most mortgages allow additional payments at any time. You can take advantage of this provision to pay extra on your mortgage principal when you come into extra money.
Here's an example: five years after moving into your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal can significantly reduce the repayment period of your loan and save enormously on interest over the duration of the mortgage loan. Unless the mortgage 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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