Paying regular extra payments toward the loan principal will provide big savings. You can pay extra on principal in many different ways. Making one extra payment one time every year may be the easiest to arrange. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Another popular option is to pay a half payment every other week. The result is you make one additional monthly payment every year. Each option produces different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some people just can't make any extra payments. Keep in mind that almost all mortgages will permit you to pay extra on your principal at any point during repayment. Any time you come into extra cash, you can use this provision to make an additional one-time payment toward your principal.
If, for example, you receive an unexpected windfall four years into your mortgage, you could apply this windfall toward your loan principal, resulting in enormous savings and a shorter loan period. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and length 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.