Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make additional payments that apply toward the principal. Borrowers pay more on principal in many different ways. Paying one extra full payment one time a year is likely the simplest to keep track of. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgage contracts will allow additional payments at any time. Any time you come into extra money, consider using this rule to pay a one-time additional payment on your principal. For example: a few years after moving into your home, you get a very large tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal will shorten the duration of your loan and save enormously on mortgage interest paid over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.