Save Big on Your Mortgage

There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments which are applied toward your loan principal. People make this happen in a few different ways. Making a single extra payment once every year may be the simplest to keep track of. But some folks will not be able to swing such an enormous extra expense, so splitting a single additional payment into twelve additional monthly payments is a great option too. Another popular option is to pay a half payment every other week. The result is you will make one additional monthly payment each year. Each option produces slightly different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some people just can't make any extra payments. Keep in mind that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. Any time you get some unexpected money, you can use this provision to make a one-time additional payment on your principal. If, for example, you receive a large gift or tax refund five years into your mortgage, paying several thousand dollars into your mortgage principal will reduce the repayment period of your loan and save enormously on interest over the life of the loan. For most loans, even this modest amount, paid early in the mortgage, could offer big savings in interest and in the length of the loan.

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