Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that are applied to your principal. People use different methods to accomplish this goal. Making 1 extra payment one time per year is probably the simplest to arrange. But many folks can't pull off such a large additional payment, so dividing one extra payment into twelve extra monthly payments is a fine option too. Finally, you can pay a half payment every other week. Each of these options produces different results, but each will significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay more every month or even every year. Remember that most mortgage contracts will permit you to pay extra on your principal at any time. You can benefit from this provision to pay extra on your principal any time you come into extra money.
For example: several years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a cash gift; , investing several thousand dollars into your home's principal will significantly shorten the period of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.
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