Save Big on your Mortgage Loan

There's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments which apply to your loan principal. Borrowers make this happen in a few ways. For many people,Perhaps the simplest way to keep track is to make 1 additional payment every year. But many people will not be able to pull off such an enormous additional expense, so splitting one extra payment into twelve extra monthly payments works as well. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option yields slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

It may not be possible for you to pay down your principal every month or even every year. Remember that most mortgages will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay extra on your principal when you come into extra money.

If, for example, you receive a very large gift or tax refund five years into your mortgage, you could pay this windfall toward your mortgage loan principal, which would result in enormous savings and a shortened loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.

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