Simple Ways to Save on Your Mortgage
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Making regular additional payments on the principal balance will provide huge savings. Borrowers accomplish this goal in several ways. Making 1 additional payment once every year is likely the simplest to keep track of. If you can't afford to pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. These options differ a little in reducing the total interest paid and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Lump-sum Additional Payment
Some borrowers just can't make any extra payments. But it's important to note that most mortgages allow you to make additional principal payments at any time. You can benefit from this provision to pay down your mortgage principal any time you come into extra money.
If, for example, you receive an unexpected windfall three years into your mortgage, investing several thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save enormously on interest paid over the life of the mortgage loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.