Making consistent additional payments on the principal will yield singificant savings. People use different methods to meet this goal. Making 1 additional full payment once per year is likely the easiest to keep track of. But some people will not be able to pull off this huge extra expense, so splitting an extra payment into 12 additional monthly payments is a fine option too. Another option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment every year. Each of these options yields different results, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgage contracts allow additional principal payments at any time. Whenever you come into unexpected cash, consider using this provision to pay a one-time additional payment toward your mortgage principal.
If, for example, you were to receive a surprise windfall five years into your mortgage, you could pay this windfall toward your loan principal, resulting in enormous savings and a shortened loan period. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.
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