Big Savings on Interest: Available to Anyone with a Mortgage
Paying consistent additional payments on the loan principal yields singificant returns. You can accomplish this using a few different techniques. For many people,Perhaps the easiest way to keep track is to make 1 additional payment per year. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment each year. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some folks can't manage any extra payments. But it's important to note that most mortgage contracts allow additional principal payments at any time. Whenever you come into extra money, consider using this rule to pay a one-time additional payment on your principal. If, for example, you receive a large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your home's principal can significantly reduce the repayment period of your loan and save enormously on interest paid over the duration of the loan. For most loans, even this modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.