There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments that apply toward the loan principal. You can pay more on principal in many different ways. For many people,Perhaps the simplest way to keep track is by making 1 additional payment per year. However, some people won't be able to afford this huge extra expense, so splitting a single additional payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying a half payment every two weeks. Each of these options produces different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any time. Whenever you come into unexpected money, you can use this provision to make an additional one-time payment toward your principal.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, you could pay a portion of this money toward your mortgage loan principal, which would result in huge savings and a shorter loan period. For most loans, even a modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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