There's a trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments that apply to your principal. Borrowers can accomplish this in various ways. For many people,Perhaps the simplest way to keep track is by making 1 extra mortgage payment every year. If you can't afford to pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can commit to paying a half payment every two weeks. These options differ a little in reducing the total interest paid 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. Remember that virtually all mortgages will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay extra on your principal when you get some extra money.
For example: five years after moving into your home, you receive a huge tax refund,a large legacy, or a non-taxable cash gift; , you could pay this money toward your mortgage loan principal, resulting in significant savings and a shorter payback period. For most loans, even this small amount, paid early in the mortgage, could offer big savings in interest and length of the loan.
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