Additional Payments Yield Huge Savings

There's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments that go to the principal. You pay more on principal by employing various techniques. Making 1 extra full payment once a year may be the easiest to arrange. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some people can't manage any extra payments. But it's important to note that most mortgage contracts will allow additional principal payments at any time. Whenever you come into extra cash, consider using this rule to pay a one-time additional payment toward mortgage principal. If, for example, you were to receive a surprise windfall just a few years into your mortgage, paying a few thousand dollars into your mortgage principal will reduce the period of your loan and save a huge amount on mortgage interest over the duration of the loan. Unless the loan is very large, even modest amounts applied early can yield huge benefits over the life of the loan.

Custom Lending Group can walk you through the pitfalls of getting a mortgage. Call us: (707) 252-2700.

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