Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments which apply to the loan principal. You can do this in various ways. For many people,Perhaps the simplest way to organize this process is by making 1 extra mortgage payment a year. Of course, some folks won't be able to swing such a large additional payment, so dividing a single additional payment into 12 additional monthly payments works as well. Finally, you can pay half of your mortgage payment every other week. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers just can't make any extra payments. But it's important to note that most mortgage contracts allow additional payments at any time. You can benefit from this provision to pay down your mortgage principal any time you get some extra money.
If, for example, you receive a large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your mortgage principal will reduce the period of your loan and save enormously on interest over the duration of the loan. For most loans, even a relatively small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
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