Save Big on your Mortgage

There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments that go to your loan principal. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to keep track is to make one extra payment every year. 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. Another popular option is to pay a half payment every other week. The effect here is that you make one extra monthly payment every year. These options differ a little in lowering the total interest paid and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.

Lump-sum Additional Payment

Some folks can't manage extra payments. But remember that most mortgage contracts will allow you to make additional principal payments at any time. You can benefit from this rule to pay down your mortgage principal when you come into extra money. Here's an example: several years after buying your home, you get a very large tax refund,a large inheritance, or a cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shorter loan period. Unless the loan is quite large, even small amounts applied early in the loan period can yield huge benefits over the duration of the loan.

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