Mortgage Savings Tips

Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments that apply to the principal. Borrowers pay against principal in various ways. For many people,Perhaps the simplest way to keep track is to make one additional mortgage payment a year. But some people will not be able to pull off such a large extra payment, so splitting an additional payment into twelve extra monthly payments is a great option too. Another very popular option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment in a year. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.

One-time Additional Payment

Some borrowers can't manage any extra payments. But it's important to note that most mortgage contracts will allow you to make additional payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you get some extra money. If, for example, you receive a large gift or tax refund five years into your mortgage, you could pay a portion of this windfall toward your loan principal, which would result in enormous savings and a shortened loan period. For most loans, even a relatively small amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.