Making regular extra payments toward the principal balance can yield huge returns. You can accomplish this in several ways. Making one extra full payment one time every year is probably the simplest to track. Of course, some people can't afford this huge extra payment, so splitting an extra payment into twelve additional monthly payments works too. Finally, you can pay a half payment every other week. These options differ a little in reducing the total interest paid and reducing payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage extra payments. Remember that almost all mortgage contracts will permit you to pay extra on your principal at any time. You can take advantage of this provision to pay down your principal when you come into extra money.
If, for example, you receive an unexpected windfall five years into your mortgage, you could apply this windfall toward your mortgage loan principal, which would result in enormous savings and a shorter payback period. Unless the mortgage loan is quite large, even modest amounts applied early can yield huge savings over the life of the loan.
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