Additional Payments Yield Huge Savings

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Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments which apply toward the loan principal. You pay against principal in various ways. For many people,Perhaps the simplest way to organize this process is to make 1 extra payment every year. But many folks won't be able to afford such an enormous extra payment, so dividing an additional payment into 12 additional monthly payments is a great option too. Another popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment in a year. Each option produces different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.

Additional One-time payment

It may not be possible for you to pay more every month or even every year. Keep in mind that virtually all mortgages will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this provision to pay down your principal when you get some extra money. If, for example, you receive a very large gift or tax refund five years into your mortgage, investing several thousand dollars into your mortgage principal will shorten the period of your loan and save a huge amount on mortgage interest over the duration of the loan. For most loans, even a relatively small amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.

Scott Hill can walk you through the pitfalls of getting a mortgage. Give us a call: 408-626-0394.