Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments which are applied toward your principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the easiest way to keep track is by making 1 additional mortgage payment per year. Of course, some people can't afford such a large additional expense, so dividing an additional payment into 12 additional monthly payments works too. Another popular option is to pay half of your payment every two weeks. The result is you make one extra monthly payment each year. Each of these options yields different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some people can't manage extra payments. But it's important to note that most mortgage contracts allow additional payments at any time. Whenever you get some unexpected money, you can use this provision to pay an additional one-time payment on mortgage principal. If, for example, you receive a large gift or tax refund just a few years into your mortgage, paying several thousand dollars into your mortgage principal can significantly shorten the period of your loan and save a huge amount on interest paid over the life of the loan. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.