Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make extra payments that are applied to your loan principal. You can do this in various ways. For many people,Perhaps the easiest way to organize this process is by making one extra payment per year. But some people can't pull off such a large extra expense, so splitting one additional payment into 12 extra monthly payments works too. Another popular option is to pay a half payment every two weeks. The result is you will make one extra monthly payment each year. Each option produces different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. Whenever you come into unexpected money, you can use this provision to pay an additional one-time payment on your principal. If, for example, you were to receive a large gift or tax refund four years into your mortgage, you could apply this money toward your loan principal, which would result in significant savings and a shorter loan period. For most loans, even a relatively small amount, paid early enough in the loan period, could offer big savings in interest and length of the loan.
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