Huge Savings on Interest: Available to Anyone
There’s a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments that are applied toward your loan principal. Borrowers pay extra in several ways. Making 1 extra payment one time a year is likely the simplest to keep track of. If you can’t pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment each year. Each option yields different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
Additional One-time payment
Some people can’t manage extra payments. Remember that virtually all mortgages will permit you to pay extra on your principal at any time. You can take advantage of this provision to pay extra on your principal any time you come into extra money. If, for example, you receive an unexpected windfall three years into your mortgage, you could apply this money toward your loan principal, resulting in significant savings and a shortened loan period. Unless the mortgage loan is very large, even small amounts applied early in the loan period can produce huge savings over the duration of the loan.