Extra Payments Provide Big Mortgage Savings
Here's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments which are applied toward your principal. Borrowers accomplish this goal in a few ways. Paying 1 extra payment one time a year is likely the simplest to keep track of. But some folks can't pull off this huge additional expense, so dividing a single extra payment into twelve extra monthly payments works as well. Finally, you can commit to paying a half payment every other week. These options differ slightly in lowering the total interest paid and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Additional One-time payment
Some folks can't manage any extra payments. Keep in mind that virtually all mortgage contracts will permit you to pay extra on your principal at any point during repayment. Any time you come into unexpected cash, you can use this rule to pay a one-time additional payment toward your principal.
Here's an example: a few years after buying your home, you receive a larger than expected tax refund,a large legacy, or a cash gift; , you could apply this money toward your loan principal, which would result in significant savings and a shortened payback period. Unless the loan is very large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
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