Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which are applied to the principal. Borrowers can accomplish this using a few different techniques. Paying 1 extra payment once a year may be the simplest to keep track of. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each option produces slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But remember that most mortgages allow additional payments at any time. Whenever you come into unexpected money, consider using this provision to pay a one-time additional payment toward principal.
Here's an example: several years after buying your home, you receive a very large tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shorter loan period. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.
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