Paying regular additional payments on the principal yields huge returns. People use different methods to meet this goal. Paying 1 extra payment once every year is perhaps the easiest to track. If you can't afford to pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Another option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment every year. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgage contracts will allow additional payments at any time. Whenever you get some unexpected money, you can use this rule to make an additional one-time payment toward mortgage principal.
Here's an example: five years after buying your home, you receive a very large tax refund,a large inheritance, or a non-taxable cash gift; , you could apply this money toward your loan principal, which would result in enormous savings and a shortened loan period. Unless the loan is very large, even small amounts applied early in the loan period can yield huge savings over the life of the loan.
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