Additional Payments Provide Huge Mortgage Savings

Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments that are applied toward the loan principal. You pay more on principal in various ways. For many people,Perhaps the easiest way to organize this process is by making 1 additional payment per year. Of course, many folks will not be able to swing this huge additional payment, so dividing an extra payment into twelve extra monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. Each option yields slightly different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.

One-time Additional Payment

It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgage contracts allow additional payments at any time. You can take advantage of this provision to pay extra on your principal when you come into extra money.

If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, you could pay this money toward your mortgage loan principal, resulting in huge savings and a shorter payback period. For most loans, even a modest amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.

Ashok Lakshmanan can walk you Ashok Lakshmanan has your mortgage answers. Call us at 6307173600.