Making regular extra payments toward the loan principal yields singificant savings. Borrowers pay extra in a few ways. Paying 1 extra payment once every year is likely the simplest to track. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each option yields different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgage contracts will allow additional payments at any time. You can benefit from this provision to pay extra on your principal any time you get some extra money.
If, for example, you receive a large gift or tax refund four years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shortened loan period. For most loans, even this small amount, paid early enough in the mortgage, could offer big savings in interest and in the length of the loan.
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