There's a trick to significantly reduce the length of your mortgage and save you thousands in interest: Make additional payments which go toward your principal. You can accomplish this in several ways. Paying 1 additional payment once every year is likely the easiest to arrange. Of course, many folks will not be able to pull off this huge additional expense, so dividing an additional payment into twelve additional monthly payments works as well. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and reducing payback length, but each will significantly reduce 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 almost all mortgages will allow you to make additional payments to your principal at any time. Any time you get some extra cash, consider using this provision to pay an additional one-time payment toward your principal. If, for example, you were to receive a large gift or tax refund three years into your mortgage, you could pay this windfall toward your loan principal, which would result in enormous savings and a shortened loan period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.
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