Paying back your mortgage early means you are making additional payments on your main loan balance. Paying off the extra capital on your mortgage can save you thousands of dollars in interest and help you build equity faster. Here are few ways to do so:
-
An extra mortgage payment every year
-
Add
extra dollars to every payment
-
Apply
a lump sum
-
Mortgage Recast (different from refinancing)
- A combination of the above
How much can I save by paying extra capital on a mortgage?
The benefit of additional repayment on a mortgage is not only to gradually reduce the monthly interest cost, but also by paying off the outstanding balance of your loan through additional payments of the mortgage principal, which drastically reduces the total interest you owe during the period Term of the loan.
Here's an example of how prepayment saves time and money: John takes out a $ 120,000 mortgage at 4.5 percent interest. The principal and monthly interest on the mortgage is $ 608.02. This happens when John makes additional mortgage payments (Source here):
0 Comments