Extra Payments Provide Big Savings

Paying consistent additional payments toward the principal balance yields enormous returns. Borrowers can pay extra on principal by employing various techniques. Paying 1 extra full payment once per year is perhaps the simplest to track. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. Each of these options produces different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.

Additional One-time payment

Some borrowers can't manage any extra payments. But you should remember that most mortgage contracts allow you to make additional principal payments at any time. You can benefit from this rule to pay down your mortgage principal any time you come into extra money. If, for example, you were to receive an unexpected windfall four years into your mortgage, investing several thousand dollars into your mortgage principal will significantly shorten the repayment duration of your loan and save enormously on mortgage interest paid over the duration of the mortgage loan. For most loans, even a small amount, paid early in the loan period, could offer big savings in interest and duration of the loan.

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