Making consistent extra payments toward the principal balance will provide huge returns. Borrowers can accomplish this in various ways. Making a single additional payment one time per year is perhaps the easiest to keep track of. However, some people will not be able to afford such an enormous additional payment, so splitting one extra payment into twelve additional monthly payments works too. Another popular option is to pay half of your payment every two weeks. The result is you will make one extra monthly payment in a year. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgage contracts allow additional principal payments at any time. Whenever you get some unexpected money, consider using this rule to pay an additional one-time payment on principal.
If, for example, you were to receive a surprise windfall five years into your mortgage, you could apply this money toward your loan principal, resulting in significant savings and a shortened loan period. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge benefits over the duration of the loan.
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