Mortgage Saving Tips

There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make additional payments that go toward your loan principal. Borrowers employ various techniques to meet this goal. Making a single extra payment once a year may be the easiest to track. Of course, many folks will not be able to pull off this huge additional payment, so splitting an additional payment into twelve additional monthly payments works too. Another option is to pay half of your payment every other week. The result is you will make one additional monthly payment each year. These options differ a little in lowering the final payback amount 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.

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 mortgages will allow you to make additional payments to your principal at any point during repayment. Any time you come into extra cash, consider using this rule to make an additional one-time payment on your mortgage principal. For example: five years after moving into your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , you could apply this money toward your loan principal, which would result in enormous savings and a shorter loan period. For most loans, even a modest amount, paid early enough in the mortgage, could offer big savings in interest and duration of the loan.

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