Mortgage Savings Tips
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There's a trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments which apply toward your principal. You can pay more on principal by employing various techniques. Paying 1 additional payment one time per year is likely the easiest to arrange. If you can't afford to pay an additional whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Another popular option is to pay half of your payment every other week. The result is you make one extra monthly payment each year. These options differ slightly in reducing the final payback amount and shortening payback length, but they will all significantly reduce the length 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. But it's important to note that most mortgage contracts will allow you to make additional principal payments at any time. You can benefit from this provision to pay down your mortgage principal any time you come into extra money. Here's an example: five years after buying your home, you receive a very large tax refund,a very large legacy, or a cash gift; , investing several thousand dollars into your home's principal will reduce the repayment duration of your loan and save enormously on interest paid over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.
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