Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments that go to the principal. You can accomplish this using a few different techniques. For many people,Perhaps the easiest way to organize this process is by making 1 extra payment a year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ a little in reducing the total interest paid and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Keep in mind that virtually all mortgage contracts will allow you to pay extra on your principal at any point during repayment. You can take advantage of this rule to pay extra on your mortgage principal any time you get some extra money.
If, for example, you receive a very large gift or tax refund just a few years into your mortgage, paying a few thousand dollars into your home's principal will significantly reduce the repayment period of your loan and save a huge amount on mortgage interest over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.
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