Paying consistent additional payments toward your principal yields singificant returns. Borrowers use different methods to accomplish this goal. For many people,Perhaps the easiest way to keep track is to make one extra payment every year. But some people will not be able to afford such a large extra expense, so splitting an additional payment into twelve extra monthly payments works as well. Another option is to pay half of your payment every two weeks. The effect here is that you will make one extra monthly payment every year. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly shorten 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. Keep in mind that almost all mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay down your mortgage principal any time you come into extra money.
If, for example, you receive a very large gift or tax refund four years into your mortgage, you could apply this money toward your loan principal, which would result in huge savings and a shortened payback period. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and in the length of the loan.
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