Big Savings on Interest: Available to Anyone
Paying regular extra payments on the loan principal will provide huge savings. People employ various techniques to meet this goal. Making a single extra payment one time every year may be the simplest to keep track of. However, many folks will not be able to swing such an enormous additional expense, so dividing a single extra payment into 12 additional monthly payments is a great option too. Finally, you can pay a half payment every other week. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Additional One-time payment
Some borrowers just can't make extra payments. Keep in mind that most mortgages will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay down your principal any time you get some extra money.
If, for example, you receive a large gift or tax refund just a few years into your mortgage, you could apply a portion of this windfall toward your mortgage loan principal, resulting in enormous savings and a shortened loan period. For most loans, even this small amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
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