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 to your loan principal. Borrowers employ various techniques to meet this goal. Making one additional payment one time per year is probably the easiest to track. Of course, some people will not be able to pull off this huge additional expense, so splitting one extra payment into twelve extra monthly payments is a great option too. Another option is to pay half of your payment every other week. The result is you will make one additional monthly payment each year. These options differ a little in reducing the total interest paid and shortening 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. Remember that virtually all mortgage contracts will allow you to pay extra on your principal at any point during repayment. You can take advantage of this rule to pay extra on your principal when you get some extra money. Here's an example: five years after buying your home, you receive a huge tax refund,a very large inheritance, or a non-taxable cash gift; , paying a few thousand dollars into your mortgage principal can reduce the repayment duration of your loan and save a huge amount on interest paid over the life of the loan. Unless the loan is very large, even small amounts applied early can produce huge savings over the duration of the loan.
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