Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments which are applied toward your loan principal. People pay extra in a few different ways. For many people,Perhaps the simplest way to organize this process is by making one additional mortgage payment per year. Of course, many folks can't pull off such a large extra payment, so dividing a single additional payment into 12 additional monthly payments works too. Another popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment in a year. Each of these options yields different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks can't manage any extra payments. Remember that almost all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Any time you get some extra money, you can use this rule to pay a one-time additional payment on your principal.
If, for example, you were to receive a large gift or tax refund five years into your mortgage, paying a few thousand dollars into your home's principal can significantly shorten the repayment duration of your loan and save enormously on interest paid over the life of the loan. For most loans, even a relatively small amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
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