Mortgage Savings

Paying consistent additional payments toward your loan principal will provide singificant savings. People pay extra in several different ways. Making one extra full payment once every year is perhaps the simplest to keep track of. Of course, some folks will not be able to afford such a large extra payment, so dividing a single extra payment into twelve extra monthly payments works too. Another option is to pay a half payment every other week. The effect here is that you make one additional monthly payment in a year. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.

Lump-sum Additional Payment

It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will allow you to make additional payments to your principal at any time. Whenever you get some unexpected cash, consider using this provision to make an additional one-time payment toward your mortgage principal.

For example: a few years after buying your home, you get a larger than expected tax refund,a large inheritance, or a cash gift; , paying a few thousand dollars into your home's principal can significantly reduce the repayment duration of your loan and save enormously on interest over the duration of the mortgage loan. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.

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