Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments which apply toward the loan principal. You can do this using a few different techniques. For many people,Perhaps the easiest way to keep track is to make 1 extra mortgage payment per year. However, many people won't be able to swing such an enormous extra payment, so splitting one additional payment into 12 additional monthly payments is a great option too. Another very popular option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment in a year. Each option yields slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some people can't manage any extra payments. Remember that almost all mortgages will allow you to pay extra on your principal at any point during repayment. You can benefit from this provision to pay extra on your principal when you come into extra money.
If, for example, you receive a surprise windfall three years into your mortgage, you could pay this windfall toward your loan principal, resulting in huge savings and a shorter loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge savings over the life of the loan.
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