Making consistent additional payments on your loan principal will provide enormous savings. Borrowers accomplish this goal in several different ways. Making a single additional full payment one time a year may be the simplest to arrange. However, some people will not be able to afford this huge extra payment, so dividing an additional payment into 12 extra monthly payments works as well. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing 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 borrowers can't manage any extra payments. Keep in mind that most mortgage contracts will permit you to pay extra on your principal at any time. Whenever you come into extra money, consider using this provision to pay a one-time additional payment on principal.
If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your mortgage principal will shorten the repayment period 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 enough in the mortgage, could offer huge savings in interest and in the duration of the loan.
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