There'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 go toward your loan principal. Borrowers make this happen in a few ways. Paying a single extra payment one time every year may be the easiest to track. If you can't pay an extra whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can commit to paying a half payment every two weeks. These options differ a little in lowering the total interest paid and shortening payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. But it's important to note that most mortgage contracts will allow you to make additional principal payments at any time. Any time you get some unexpected money, consider using this rule to make an additional one-time payment toward your principal. For example: five years after moving into your home, you get a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your mortgage principal can shorten the repayment duration of your loan and save a huge amount on mortgage interest over the duration of the mortgage loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.
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