There's a trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments that are applied to your principal. Borrowers use different methods to accomplish this goal. For many people,Perhaps the easiest way to organize this process is by making one extra mortgage payment a year. But many folks can't pull off such an enormous extra expense, so dividing a single extra payment into 12 additional monthly payments is a great option too. Finally, you can commit to paying half of your mortgage 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 duration of the loan.
It may not be possible for you to pay more every month or even every year. Keep in mind that most mortgage contracts will allow you to make additional payments to your principal at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money.
If, for example, you were to receive a large gift or tax refund three years into your mortgage, you could apply this money toward your loan principal, which would result in huge savings and a shorter payback period. Unless the mortgage loan is very large, even small amounts applied early in the loan period can yield huge benefits over the life of the loan.
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