Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that go to your loan principal. You can accomplish this in several ways. For many people,Perhaps the simplest way to organize this process is by making 1 extra payment a year. Of course, some folks won't be able to pull off this huge extra payment, so splitting a single extra payment into 12 additional monthly payments is a fine option too. Another popular option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment every year. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage extra payments. But remember that most mortgage contracts allow you to make additional payments at any time. You can take advantage of this rule to pay extra on your mortgage principal any time you get some extra money.
Here's an example: several years after buying your home, you get a huge tax refund,a large legacy, or a cash gift; , investing a few thousand dollars into your home's principal will significantly reduce the repayment period of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. For most loans, even this modest amount, paid early enough in the mortgage, could offer big savings in interest and in the length of the loan.
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