Additional Payments Provide Huge Savings

Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make additional payments that go to the loan principal. Borrowers pay extra on principal in various ways. Paying a single additional full payment one time a year is perhaps the simplest to arrange. However, many people won't be able to pull off such a large extra payment, so splitting a single extra payment into 12 extra monthly payments is a fine option too. Another option is to pay half of your payment every other week. The result is you will make one extra monthly payment every year. These options differ slightly in reducing the total interest paid and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.

One-time Additional Payment

It may not be possible for you to pay down your principal every month or even every year. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any time. You can take advantage of this rule to pay down your mortgage principal when you come into extra money.

If, for example, you were to receive a large gift or tax refund four years into your mortgage, paying several thousand dollars into your home's principal will significantly shorten the repayment duration of your loan and save enormously on interest over the life of the loan. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.

Boardwalk Mortgage can walk you Boardwalk Mortgage can answer questions about these interest savings and many others. Call us at 1-800-606-2794.