Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make extra payments that are applied to the principal. People pay extra in several ways. For many people,Perhaps the easiest way to keep track is to make one additional payment a year. If you can't pay an extra whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Another popular option is to pay a half payment every other week. The result is you make one extra monthly payment in a year. These options differ a little in lowering the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some people can't manage any extra payments. Remember that most mortgages will permit you to make additional payments to your principal at any point during repayment. You can benefit from this rule to pay extra on your mortgage principal when you get some extra money.
If, for example, you were to receive a large gift or tax refund three years into your mortgage, paying several thousand dollars into your home's principal can reduce the duration of your loan and save enormously on interest over the duration of the loan. For most loans, even this modest amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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