Big Savings on Interest: Available to Anyone

Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments which go to your loan principal. You can accomplish this using a few different techniques. Paying a single extra payment once every year may be the easiest to arrange. But some people will not be able to swing such a large additional expense, so dividing a single additional payment into twelve additional monthly payments is a great option too. Finally, you can commit to paying a half payment every other week. Each option produces slightly different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

It may not be possible for you to pay extra every month or even every year. Remember that virtually all mortgages will allow you to make additional payments to your principal at any time. Any time you come into extra money, you can use this rule to make an additional one-time payment on principal.

If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, you could apply a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shorter payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.

Atlantic Financial Services can walk you the mortgage process. Give us a call at (732) 969-9300.

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