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 go to the loan principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the easiest way to keep track is by making 1 additional mortgage payment every year. However, some people can't pull off this huge additional payment, so splitting an extra payment into 12 extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ a little in lowering the total interest paid and shortening payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks just can't make extra payments. Keep in mind that virtually all mortgage contracts will allow you to make additional payments to your principal at any time. Whenever you get some unexpected cash, you can use this provision to make an additional one-time payment on mortgage principal. If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, you could apply a portion of this windfall toward your loan principal, resulting in huge savings and a shorter loan period. For most loans, even this small amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.
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