Big Savings on Interest: Available to Anyone
Making regular extra payments toward your principal balance will provide enormous savings. Borrowers pay extra in a few ways. For many people,Perhaps the easiest way to organize this process is by making one extra mortgage payment every year. However, many people will not be able to pull off such an enormous extra payment, so splitting one extra payment into 12 additional monthly payments works too. Finally, you can commit to paying a half payment every two weeks. Each of these options produces slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some borrowers just can't make any extra payments. Remember that almost all mortgages will permit you to make additional payments to your principal at any point during repayment. Whenever you get some unexpected cash, you can use this provision to pay an additional one-time payment toward your mortgage principal. Here's an example: a few years after moving into your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in significant savings and a shorter loan period. For most loans, even this modest amount, paid early in the loan period, could offer big savings in interest and length of the loan.