Making regular additional payments toward your loan principal can yield big savings. You pay more on principal in various ways. Paying a single extra payment once per year may be the easiest to arrange. But some folks will not be able to swing this huge extra payment, so splitting an extra payment into 12 extra monthly payments works too. Another option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment each year. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Keep in mind that virtually all mortgages will allow you to make additional payments to your principal at any point during repayment. You can take advantage of this provision to pay extra on your mortgage principal when you get some extra money. For example: five years after moving into your home, you receive a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this windfall toward your loan principal, resulting in significant savings and a shorter loan period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.
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