Additional Payments Provide Huge Savings

Making consistent additional payments on your loan principal will yield big returns. Borrowers can do this using a few different techniques. Making one extra full payment once per year is perhaps the easiest to track. However, many people can't pull off this huge extra expense, so dividing one additional payment into twelve additional monthly payments is a great option too. Another option is to pay a half payment every other week. The result is you will make one additional monthly payment each year. These options differ a little in reducing the total interest paid and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.

Additional One-time payment

It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgage contracts will allow additional payments at any time. Whenever you come into unexpected money, consider using this provision to make a one-time additional payment on principal.

For example: five years after moving into your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , investing several thousand dollars into your home's principal can significantly shorten the period of your loan and save enormously on mortgage interest over the duration of the mortgage loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.