Making consistent extra payments toward your loan principal can yield big savings. Borrowers can do this using a few different techniques. Paying a single additional payment once per year is likely the easiest to keep track of. If you can't 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 popular option is to pay a half payment every other week. The effect here is that you make one additional monthly payment in a year. Each of these options produces different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
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 principal payments at any time. Whenever you come into unexpected money, you can use this rule to pay a one-time additional payment toward mortgage principal.
If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, you could apply this windfall toward your loan principal, which would result in significant savings and a shortened loan period. For most loans, even a relatively modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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