Making regular additional payments on the principal will provide big returns. Borrowers employ various techniques to accomplish this goal. Paying 1 additional full payment once every year is perhaps the simplest to track. However, some people won't be able to afford this huge extra payment, so dividing a single additional payment into 12 extra monthly payments works too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options yields slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some people can't manage extra payments. But it's important to note that most mortgages allow additional principal payments at any time. You can benefit from this provision to pay down your principal when you come into extra money.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your home's principal will shorten the repayment period of your loan and save enormously on interest over the duration of the loan. For most loans, even this small amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.
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