Simple Ways to Save Big on Your Mortgage
Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which are applied to your principal. Borrowers use different methods to meet this goal. Making one additional payment one time per year is perhaps the simplest to arrange. Of course, many folks won't be able to swing such a large extra payment, so splitting an additional payment into twelve additional monthly payments is a great option too. Another popular option is to pay a half payment every other week. The result is you will make one additional monthly payment each year. These options differ slightly in reducing the total interest paid and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
Lump-sum Additional Payment
It may not be possible for you to pay down your principal every month or even every year. Keep in mind that most mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay extra on your mortgage principal when you get some extra money. If, for example, you receive a large gift or tax refund four years into your mortgage, investing several thousand dollars into your mortgage principal will shorten the repayment period of your loan and save enormously on interest over the life of the loan. For most loans, even this modest amount, paid early in the loan period, could offer big savings in interest and length of the loan.