Save Big on Your Mortgage
There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the life of your loan... make extra payments that are applied to the loan principal. Borrowers can pay more on principal in various ways. One common way is to split an extra payment into twelve extra monthly payments. Another widely used method is to pay half of your mortgage payment every two weeks. Each of these options yields different results, but they will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Lump Sum Extra Payment
Some borrowers can't manage extra payments. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any point during repayment. Whenever you get some extra cash, consider using this provision to make an additional one-time payment toward your principal. For example: several years after buying your home you get a huge tax refund or a large cash gift; by investing a few thousand dollars into your mortgage principal can significantly reduce the repayment duration of your loan and save enormously on interest over the life of the mortgage loan. Unless the loan is quite large, even modest amounts applied early in the loan period can yield huge savings over the duration of the loan.