Paying regular additional payments on the principal can yield big savings. Borrowers can accomplish this in several ways. For many people,Perhaps the simplest way to keep track is to make one extra mortgage payment a year. However, some folks can't pull off this huge additional expense, so splitting one extra payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying a half payment every two weeks. These options differ slightly in reducing the final payback amount and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Whenever you come into unexpected money, consider using this rule to make a one-time additional payment on your mortgage principal.
If, for example, you were to receive an unexpected windfall three years into your mortgage, you could pay this windfall toward your loan principal, which would result in significant savings and a shortened payback period. Unless the loan is quite large, even modest amounts applied early in the loan period can yield huge savings over the life of the loan.
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