Paying regular extra payments on your loan principal can yield singificant returns. Borrowers can do this in several ways. Paying a single extra payment one time every year is likely the simplest to keep track of. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay a half payment every other week. Each of these options yields different results, but each will significantly shorten the length 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. Remember that most mortgage contracts will allow you to pay extra on your principal at any time. Any time you get some unexpected cash, consider using this provision to make a one-time additional payment on principal.
If, for example, you receive a surprise windfall five years into your mortgage, you could pay this money toward your mortgage loan principal, which would result in significant savings and a shorter payback period. For most loans, even a small amount, paid early enough in the mortgage, could offer big savings in interest and in the duration of the loan.
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