There's a trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments which go to your principal. People employ various techniques to accomplish this goal. Making 1 extra full payment one time every year is perhaps the simplest to keep track of. However, some people will not be able to swing such an enormous additional expense, so dividing a single extra payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay extra every month or even every year. Remember that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you get some extra cash, you can use this rule to pay an additional one-time payment toward principal. For example: several years after buying your home, you get a huge tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this money toward your loan principal, which would result in significant savings and a shorter loan period. For most loans, even this modest amount, paid early 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.