There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments that go to your loan principal. You can accomplish this in several ways. Making one extra payment one time a year is likely the easiest to arrange. However, some folks can't swing such an enormous additional expense, so dividing a single additional payment into twelve extra monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay more every month or even every year. Keep in mind that most mortgages will permit you to make additional payments to your principal at any point during repayment. Any time you come into unexpected cash, you can use this provision to pay a one-time additional payment toward mortgage principal.
If, for example, you 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. Unless the loan is very large, even small amounts applied early can yield huge benefits over the duration of the loan.
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