Mortgage Saving

There's a trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that are applied to your loan principal. Borrowers make this happen in several ways. Making one additional payment once every year is probably the easiest to arrange. If you can't 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 pay a half payment every two weeks. These options differ a little in reducing the total interest paid and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid 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. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any time. Any time you get some unexpected money, you can use this rule to make an additional one-time payment on principal.

Here's an example: five years after buying your home, you receive a huge tax refund,a very large legacy, or a non-taxable cash gift; , investing several thousand dollars into your mortgage principal can significantly shorten the period of your loan and save enormously on interest over the life of the loan. Unless the loan is quite large, even a few thousand dollars applied early can yield huge savings over the duration of the loan.

Mortgage Questions?

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