Simple Ways to Save Big on Your Mortgage

Making consistent additional payments toward your loan principal will yield huge savings. Borrowers pay extra in several different ways. For many people, perhaps the simplest way to keep track is by making one additional payment every year. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every two weeks. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.

Additional One-time payment

Some people can't manage extra payments. But you should remember that most mortgage contracts will allow additional payments at any time. Any time you come into unexpected cash, you can use this rule to make a one-time additional payment toward your mortgage principal.

For example: five years after buying your home, you receive a very large tax refund, a large legacy, or a cash gift; paying a few thousand dollars into your mortgage principal will reduce the repayment period of your loan and save enormously on interest paid over the duration of the mortgage loan. For most loans, even a relatively modest amount, paid early in the mortgage, could offer big savings in interest and duration of the loan.