Paying consistent additional payments toward your loan principal can yield enormous savings. Borrowers pay against principal by employing various techniques. Paying a single additional payment one time a year is probably the easiest to arrange. Of course, many people won't be able to swing such a large extra payment, so splitting one additional payment into 12 extra monthly payments is a great option too. Finally, you can pay half of your mortgage payment every other week. Each of these options produces slightly different results, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers can't manage any extra payments. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any point during repayment. Any time you get some extra money, you can use this provision to make an additional one-time payment toward mortgage principal.
If, for example, you were to receive a surprise windfall three years into your mortgage, you could apply a portion of this money toward your loan principal, resulting in significant savings and a shortened loan period. Unless the loan is very large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.
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