Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments that go toward your principal. Borrowers can pay extra on principal in many different ways. For many people,Perhaps the simplest way to keep track is by making one additional mortgage payment every year. If you can't afford to pay an additional whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment every year. Each option yields slightly different results, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. But remember that most mortgages will allow additional payments at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money.
If, for example, you were to receive a very large gift or tax refund five years into your mortgage, you could pay a portion of this windfall toward your loan principal, which would result in significant savings and a shorter payback period. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge savings over the duration of the loan.
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