There's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments that apply toward your loan principal. People make this happen in several different ways. Making 1 extra full payment once per year is likely the easiest to arrange. However, many people will not be able to swing this huge additional expense, so dividing a single additional payment into 12 additional monthly payments works as well. Another very popular option is to pay a half payment every two weeks. The result is you will make one additional monthly payment each year. Each option yields different results, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some borrowers just can't make extra payments. Keep in mind that most mortgage contracts will allow you to make additional payments to your principal at any time. Whenever you come into extra cash, consider using this provision to pay a one-time additional payment on principal.
If, for example, you were to receive a surprise windfall five years into your mortgage, you could apply a portion of this money toward your mortgage loan principal, which would result in significant savings and a shortened loan period. For most loans, even a modest amount, paid early in the loan period, could offer huge savings in interest and length of the loan.
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