Making consistent additional payments on the loan principal provides big returns. You can pay extra on principal in many different ways. Paying one additional full payment one time per year is probably the simplest to keep track of. However, some people won't be able to pull off such an enormous additional expense, so splitting one additional payment into twelve additional monthly payments is a fine option too. Another popular option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment each year. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some folks can't manage extra payments. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any point during repayment. Any time you come into extra money, you can use this rule to pay a one-time additional payment toward your mortgage principal.
If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your home's principal will reduce the duration of your loan and save enormously on interest over the duration of the mortgage loan. For most loans, even a small amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
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