Mortgage Savings Tips
Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which are applied toward the loan principal. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the simplest way to keep track is by making one additional payment a year. But many folks can't swing such an enormous extra payment, so splitting a single additional payment into 12 additional monthly payments is a great option too. Another option is to pay half of your payment every two weeks. The result is you will make one additional 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 your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay down your principal every month or even every year. Remember that most mortgage contracts will permit you to pay extra on your principal at any point during repayment. You can benefit from this rule to pay extra on your principal any time you get some extra money.
For example: a few years after buying your home, you get a larger than expected tax refund,a very large inheritance, or a cash gift; , paying a few thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save enormously on mortgage interest paid over the duration of the mortgage loan. Unless the loan is quite large, even small amounts applied early can produce huge benefits over the duration of the loan.