Big Savings on Interest: Available to Anyone
Making regular additional payments toward the principal balance can yield huge returns. You can pay against principal by employing various techniques. For many people,Perhaps the easiest way to keep track is by making one extra payment a year. If you can't pay an additional whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can pay a half payment every two weeks. Each of these options yields different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some borrowers just can't make any extra payments. Remember that virtually all mortgage contracts will permit you to make additional payments to your principal at any point during repayment. Whenever you get some unexpected cash, consider using this rule to make a one-time additional payment on principal. If, for example, you receive a very large gift or tax refund four years into your mortgage, paying a few thousand dollars into your home's principal can shorten the repayment duration of your loan and save enormously on mortgage interest paid over the duration of the loan. For most loans, even a small amount, paid early in the loan period, could offer big savings in interest and in the length of the loan.