Making consistent additional payments toward your loan principal will provide big savings. Borrowers can accomplish this in various ways. Making a single extra payment once every year is likely the simplest to track. However, some folks will not be able to swing such a large additional expense, so dividing one extra payment into 12 extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. Remember that most mortgage contracts will permit you to make additional payments to your principal at any point during repayment. Any time you get some extra money, consider using this provision to pay an additional one-time payment toward principal.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save enormously on mortgage interest over the life of the loan. Unless the loan is very large, even small amounts applied early can yield huge benefits over the life of the loan.
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