Extra Payments Yield Huge Savings
Paying consistent additional payments on the principal provides big returns. People pay extra in a few ways. For many people,Perhaps the easiest way to organize this process is by making 1 extra mortgage payment a year. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another very popular option is to pay a half payment every two weeks. The effect here is that you make one additional monthly payment in a year. Each option produces different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Lump-sum Additional Payment
Some borrowers just can't make extra payments. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any point during repayment. Whenever you get some unexpected money, you can use this provision to make an additional one-time payment on principal. For example: a few years after buying your home, you receive a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal can reduce the repayment period of your loan and save enormously on mortgage interest over the duration of the loan. For most loans, even this small amount, paid early in the mortgage, could offer big savings in interest and length of the loan.