Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments that apply toward the principal. Borrowers make this happen in several different ways. For many people,Perhaps the easiest way to keep track is to make 1 additional payment per year. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another popular option is to pay a half payment every two weeks. The result is you make one extra monthly payment each year. These options differ slightly in lowering the total interest paid and shortening payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgage contracts allow you to make additional payments at any time. Any time you come into unexpected cash, consider using this provision to make a one-time additional payment on principal.
For example: a few years after buying your home, you get a very large tax refund,a very large inheritance, or a cash gift; , you could apply this windfall toward your loan principal, resulting in huge savings and a shorter payback period. For most loans, even this modest amount, paid early in the loan period, could offer big savings in interest and in the 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.