There's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments which go toward your loan principal. People accomplish this goal in several different ways. For many people,Perhaps the simplest way to organize this process is to make one additional mortgage 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. Another option is to pay a half payment every two weeks. The effect here is that you make one additional monthly payment every year. These options differ a little in lowering the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. But remember that most mortgage contracts will allow additional payments at any time. You can benefit from this provision to pay down your principal when you get some extra money. Here's an example: a few years after buying your home, you get a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , investing several thousand dollars into your home's principal can significantly reduce the repayment duration of your loan and save a huge amount on interest paid over the duration of the loan. For most loans, even this small amount, paid early in the mortgage, could offer huge savings in interest and in the duration 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.