Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments which apply to your loan principal. People make this happen in a few ways. Making one additional full payment once a year is likely the easiest to track. But some folks can't pull off this huge extra expense, so dividing a single additional payment into 12 extra monthly payments works too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgages allow you to make additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal any time you get some extra money. Here's an example: several years after moving into your home, you receive a very large tax refund,a large legacy, or a non-taxable cash gift; , investing several thousand dollars into your mortgage principal can significantly shorten the repayment duration of your loan and save enormously on interest over the life of the mortgage loan. For most loans, even this small amount, paid early in the loan period, could offer big savings in interest and in the duration of the loan.
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