Extra Payments Yield Big Savings
Making consistent extra payments on your principal yields singificant savings. Borrowers pay extra on principal by employing various techniques. For many people,Perhaps the easiest way to keep track is to make 1 extra payment every year. Of course, many people can't swing this huge extra expense, so dividing an extra payment into 12 extra monthly payments works too. Finally, you can commit to paying a half payment every other week. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Additional One-time payment
It may not be possible for you to pay extra every month or even every year. Keep in mind that almost all mortgages will permit you to make additional payments to your principal at any point during repayment. You can benefit from this provision to pay down your principal any time you get some extra money. For example: a few years after moving into your home, you receive a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , paying several thousand dollars into your home's principal will reduce the repayment duration of your loan and save a huge amount on interest paid over the duration of the mortgage loan. For most loans, even this relatively small amount, paid early enough in the loan period, could offer big savings in interest and in the length of the loan.