Paying consistent additional payments on the loan principal will provide huge returns. People use different methods to meet this goal. Making 1 extra payment once every year is perhaps the easiest to track. However, some folks won't be able to afford such an enormous additional expense, so dividing a single additional payment into twelve extra monthly payments is a fine option too. Finally, you can pay half of your mortgage payment every other week. These options differ a little in lowering the final payback amount and reducing payback length, but each will significantly reduce the duration 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. But it's important to note that most mortgage contracts will allow additional payments at any time. You can benefit from this rule to pay extra on your principal when you get some extra money. If, for example, you receive an unexpected windfall four years into your mortgage, you could apply this money toward your loan principal, which would result in significant savings and a shortened loan period. For most loans, even this modest amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.