About Additional Payments

Making additional payments on your loan can significantly reduce your loan term and save money on interest. Understanding different payment strategies helps maximize the benefits.

Payment Strategies

Monthly Extra Payments

  • Consistent debt reduction
  • Easier to budget
  • Regular interest savings
  • Faster equity building

Annual Extra Payments

  • Good for bonuses/tax returns
  • Significant principal reduction
  • Flexible timing
  • Lower payment commitment

Benefits of Extra Payments

Financial Impact

  • Reduced total interest
  • Shorter loan term
  • Faster equity growth
  • Improved debt ratios

Key Considerations

  • Prepayment penalties
  • Emergency fund balance
  • Other financial goals
  • Investment alternatives

Implementation Tips

Payment Methods

  • Round up regular payments
  • Automate extra payments
  • Apply windfalls strategically
  • Track progress regularly

Best Practices

  • Specify for principal only
  • Maintain payment records
  • Review loan statements
  • Monitor payoff progress