Paying consistent extra payments toward the principal balance yields singificant returns. Borrowers pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to keep track is by making 1 extra payment per year. But some people won't be able to afford such a large additional payment, so dividing one extra payment into 12 extra monthly payments is a fine option too. Finally, you can pay half of your mortgage payment every other week. Each of these options yields slightly different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some folks just can't make extra payments. But you should remember that most mortgage contracts will allow additional payments at any time. Any time you come into unexpected money, consider using this provision to make a one-time additional payment toward your principal.
If, for example, you receive an unexpected windfall just a few years into your mortgage, you could apply this windfall toward your loan principal, resulting in significant savings and a shorter loan period. For most loans, even this small amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.
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