Making consistent additional payments toward the principal balance will provide enormous savings. Borrowers can do this using a few different techniques. Paying a single extra payment once every year is probably the easiest to arrange. But some folks will not be able to swing such a large additional payment, so dividing an additional payment into 12 extra monthly payments works as well. Finally, you can pay half of your mortgage payment every other week. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But remember that most mortgages allow you to make additional principal payments at any time. Any time you come into unexpected money, you can use this rule to make an additional one-time payment on mortgage principal.
If, for example, you were to receive an unexpected windfall five years into your mortgage, paying several thousand dollars into your mortgage principal can shorten the duration of your loan and save enormously on interest paid over the duration of the loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge benefits over the life of the loan.
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