Additional Payments Yield Huge Savings

Paying consistent extra payments on the loan principal yields huge returns. People pay extra in several ways. For many people,Perhaps the easiest way to keep track is to make one additional payment every year. But many people won't be able to afford such an enormous additional payment, so dividing a single additional payment into 12 extra monthly payments is a great option too. Another very popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment in a year. Each of these options yields slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.

One-time Additional Payment

It may not be possible for you to pay more every month or even every year. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any point during repayment. You can benefit from this rule to pay down your principal any time you come into extra money. If, for example, you were to receive a surprise windfall five years into your mortgage, paying several thousand dollars into your home's principal will shorten the period of your loan and save enormously on interest paid over the life of the loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.

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