Paying consistent additional payments toward the loan principal provides singificant returns. Borrowers can do this in several ways. For many people,Perhaps the easiest way to organize this process is by making 1 extra mortgage payment every year. However, some folks can't afford such a large additional payment, so dividing one extra payment into twelve additional monthly payments works as well. Another very popular option is to pay a half payment every two weeks. The result is you will make one additional monthly payment in a year. These options differ a little in lowering the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some folks can't manage any extra payments. But remember that most mortgage contracts allow you to make additional payments at any time. Whenever you get some extra money, you can use this rule to make a one-time additional payment toward mortgage principal.
For example: five years after moving into your home, you get a huge tax refund,a large legacy, or a non-taxable cash gift; , you could pay this money toward your loan principal, which would result in huge savings and a shorter loan period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.
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