Big Interest Savings: Available to Anyone with a Mortgage

There's a trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments which apply to your principal. Borrowers accomplish this goal in a few ways. Making one additional payment one time per year is perhaps the simplest to keep track of. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment in a year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

Some people can't manage any extra payments. But it's important to note that most mortgages allow you to make additional payments at any time. Whenever you get some unexpected money, you can use this rule to pay an additional one-time payment toward mortgage principal.

If, for example, you were to receive a surprise windfall five years into your mortgage, you could pay a portion of this money toward your mortgage loan principal, which would result in huge savings and a shortened payback period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.

Wisdom Financial, Inc. can walk you Wisdom Financial, Inc. can answer questions about these interest savings and many others. Call us at 708.499.6088.