Big Interest Savings: Available to Anyone
There's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments that go to your principal. People use different methods to meet this goal. Making one extra full payment once every year may be the simplest to keep track of. But some folks will not be able to swing such an enormous extra payment, so dividing one additional payment into twelve extra monthly payments works as well. Another option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment in a year. Each option yields slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
One-time Additional Payment
Some borrowers can't manage extra payments. But remember that most mortgages will allow additional payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you come into extra money.
Here's an example: a few years after buying your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your loan principal, resulting in huge savings and a shortened payback period. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
Savers Home Loans can walk you At Savers Home Loans, we answer questions about interest-saving strategies every day. Give us a call at (800) 974-0509.