Additional Payments Yield Huge Savings
There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments that go toward the loan principal. You can accomplish this using a few different techniques. Making one additional payment one time every year is perhaps the simplest to track. If you can't pay an additional whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Another popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment each year. These options differ slightly in lowering the total interest paid and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
One-time Additional Payment
It may not be possible for you to pay more every month or even every year. Keep in mind that most mortgage contracts will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this provision 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 huge tax refund,a very large inheritance, or a cash gift; , investing several thousand dollars into your mortgage principal will significantly shorten the repayment duration of your loan and save enormously on mortgage interest over the duration of the mortgage loan. Unless the loan is quite large, even small amounts applied early in the loan period can yield huge benefits over the duration of the loan.
Affinity Mortgage Brokers can walk you Affinity Mortgage Brokers can answer questions about these interest savings and many others. Call us at 719-425-2226.