Paying regular extra payments toward the loan principal yields enormous returns. Borrowers can pay more on principal in many different ways. Making a single additional payment once per year may be the simplest to track. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But remember that most mortgages will allow additional payments at any time. Any time you get some extra money, consider using this rule to pay a one-time additional payment toward mortgage principal.
For example: five years after buying your home, you get a huge tax refund,a large legacy, or a non-taxable cash gift; , you could apply this money toward your mortgage loan principal, resulting in significant savings and a shortened loan period. Unless the loan is quite large, even modest amounts applied early can yield huge savings over the life of the loan.
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