Additional Payments Provide Big Savings
Making regular extra payments toward your loan principal will yield big returns. People accomplish this goal in a few different ways. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment a year. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment every year. These options differ a little in reducing the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgage contracts will allow you to make additional payments at any time. You can take advantage of this provision to pay extra on your mortgage principal any time you come into extra money. If, for example, you receive a very large gift or tax refund four years into your mortgage, you could pay a portion of this money toward your loan principal, resulting in huge savings and a shorter loan period. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can produce huge savings over the life of the loan.
