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 loan principal. Borrowers pay extra in several different ways. Paying 1 extra full payment once per year is perhaps the simplest to keep track of. But many folks won't be able to pull off this huge extra payment, so splitting an extra payment into 12 extra monthly payments works as well. Finally, you can commit to paying a half payment every other week. Each option yields slightly different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Remember that most mortgages will permit you to make additional payments to your principal at any point during repayment. Whenever you get some extra money, consider using this provision to make an additional one-time payment toward mortgage principal. Here's an example: a few years after moving into your home, you get a huge tax refund,a very large legacy, or a cash gift; , you could pay a portion of this money toward your mortgage loan principal, which would result in enormous savings and a shortened loan period. Unless the loan is quite large, even a few thousand dollars applied early can produce huge savings over the life of the loan.
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