Paying consistent extra payments toward the loan principal provides huge returns. You can pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is by making 1 extra payment every year. However, some people won't be able to pull off such an enormous extra expense, so splitting an extra payment into twelve extra monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some folks just can't make extra payments. Remember that virtually all mortgage contracts will allow you to pay extra on your principal at any time. You can benefit from this provision to pay down your principal when you come into extra money.
If, for example, you receive a large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your mortgage principal can shorten the duration of your loan and save enormously on interest paid over the duration of the loan. Unless the mortgage loan is quite large, even modest amounts applied early can yield huge savings over the duration of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.