Making consistent extra payments on your principal can yield huge savings. Borrowers can do this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make one extra mortgage payment every year. But some people won't be able to afford such a large additional payment, so splitting a single additional payment into twelve additional monthly payments works too. Another option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment each year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. Whenever you get some unexpected money, you can use this provision to pay a one-time additional payment toward mortgage principal.
If, for example, you receive a surprise windfall four years into your mortgage, paying several thousand dollars into your home's principal will significantly shorten the period of your loan and save a huge amount on mortgage interest paid over the duration of the loan. For most loans, even a relatively modest 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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