There's a trick to reduce the repayment period of your mortgage and save thousands in interest: Make additional payments that apply to the loan principal. You pay against principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is to make 1 extra payment a year. But some folks will not be able to pull off such a large additional payment, so dividing one extra payment into 12 additional monthly payments works too. Another option is to pay a half payment every other week. The result is you will make one additional monthly payment every year. Each option produces different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Remember that almost all mortgage contracts will permit you to pay extra on your principal at any time. Any time you come into extra cash, consider using this rule to make an additional one-time payment toward principal.
If, for example, you were to receive a surprise windfall three years into your mortgage, investing several thousand dollars into your mortgage principal will significantly shorten the repayment duration of your loan and save a huge amount on mortgage interest over the life of the loan. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge savings over the duration of the loan.
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