Save Big on Your Mortgage

There's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments that go to the principal. Borrowers pay extra in several different ways. Making one extra full payment one time a year is likely the simplest to track. Of course, some folks will not be able to pull off this huge extra expense, so splitting a single extra payment into twelve additional monthly payments works as well. Another very popular option is to pay half of your payment every two weeks. The result is you make one additional monthly payment each year. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.

Additional One-time payment

It may not be possible for you to pay extra 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. You can benefit from this rule to pay extra on your principal any time you come into extra money. If, for example, you were to receive a surprise windfall four years into your mortgage, paying a few thousand dollars into your mortgage principal can reduce the repayment duration of your loan and save enormously on mortgage interest paid over the life of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge savings over the life of the loan.

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