Save Big on your Mortgage

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There's a trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make additional payments which are applied toward your loan principal. Borrowers can accomplish this in various ways. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment every year. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every other week. These options differ a little in lowering the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid 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 mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Whenever you come into unexpected money, you can use this rule to make an additional one-time payment on your principal.

If, for example, you receive a very large gift or tax refund just a few years into your mortgage, you could pay a portion of this windfall toward your loan principal, which would result in huge savings and a shortened payback period. For most loans, even this small amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.

Tom Mencke has mortgage answers. Call him at 1-708-647-5240.