Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments which are applied toward your loan principal. You pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is to make one additional payment a year. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some folks can't manage extra payments. Keep in mind that almost all mortgage contracts will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this rule to pay extra on your principal any time you come into extra money.
For example: five years after buying your home, you receive a larger than expected tax refund,a large inheritance, or a cash gift; , investing a few thousand dollars into your mortgage principal will reduce the duration of your loan and save enormously on interest over the life of the mortgage loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge savings over the life of the loan.
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