Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments that go to your principal. You can pay against principal in many different ways. For many people,Perhaps the simplest way to keep track is by making one extra mortgage payment a year. If you can't afford to pay an additional whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. Each option produces slightly different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. But remember that most mortgages allow you to make additional payments at any time. You can benefit from this provision to pay extra on your principal any time you get some extra money.
If, for example, you receive a large gift or tax refund three years into your mortgage, paying several thousand dollars into your home's principal can reduce the repayment duration of your loan and save a huge amount on interest over the duration of the mortgage loan. Unless the loan is very large, even a few thousand dollars applied early can yield huge savings over the life of the loan.
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