Huge Savings on Interest: Available to Anyone
Making consistent extra payments toward the principal balance will provide singificant savings. Borrowers pay more on principal in many different ways. Paying 1 additional full payment one time every year may be the easiest to arrange. However, many folks will not be able to afford such a large additional expense, so dividing a single extra payment into twelve additional monthly payments is a great option too. Finally, you can pay half of your mortgage payment every two weeks. Each of these options yields different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Lump-sum Additional Payment
Some people can't manage any extra payments. But remember that most mortgage contracts will allow you to make additional payments at any time. You can take advantage of this provision to pay down your principal when you come into extra money. Here's an example: several years after buying your home, you receive a very large tax refund,a very large inheritance, or a cash gift; , you could pay this money toward your mortgage loan principal, resulting in significant savings and a shorter payback period. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and in the length of the loan.