Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments which apply to the principal. Borrowers can pay against principal in many different ways. Making a single additional full payment one time per year is probably the easiest to arrange. Of course, some folks can't afford this huge additional payment, so splitting a single extra payment into twelve extra monthly payments is a fine option too. Another option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment each year. These options differ a little in lowering the final payback amount and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Remember that most mortgages will permit you to pay extra on your principal at any point during repayment. Any time you come into extra money, consider using this provision to pay a one-time additional payment toward your mortgage principal.
Here's an example: five years after moving into your home, you get a larger than expected tax refund,a very large legacy, or a cash gift; , you could pay a portion of this money toward your loan principal, which would result in huge savings and a shortened loan period. For most loans, even this relatively modest amount, paid early in the loan period, could offer big savings in interest and in the length of the loan.
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