Extra Payments Provide Big Mortgage Savings

There's a trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which apply toward your loan principal. People use different methods to meet this goal. Paying one extra payment once a year is perhaps the simplest to arrange. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay a half payment every two weeks. The result is you will make one extra monthly payment every year. These options differ slightly in reducing the total interest paid and shortening payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.

Additional One-time payment

Some folks can't manage any extra payments. Keep in mind that most mortgage contracts will allow you to pay extra on your principal at any time. Any time you come into extra cash, consider using this provision to make a one-time additional payment on mortgage principal. If, for example, you were to receive an unexpected windfall just a few years into your mortgage, you could apply this money toward your mortgage loan principal, which would result in huge savings and a shorter loan period. Unless the mortgage loan is quite large, even modest amounts applied early can produce huge benefits over the life of the loan.

Custom Lending Group can walk you through the pitfalls of getting a mortgage. Give us a call: 7072522700.

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