Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that apply to the loan principal. People use different methods to accomplish this goal. For many people,Perhaps the easiest way to keep track is to make 1 additional payment per year. Of course, some folks will not be able to afford such a large extra expense, so splitting one additional payment into 12 extra monthly payments is a great option too. Another popular option is to pay half of your payment every other week. The result is you make one extra monthly payment each year. These options differ a little in reducing the total interest paid 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 extra every month or even every year. But you should remember that most mortgages will allow additional payments at any time. You can benefit from this rule to pay down your mortgage principal any time you get some extra money. Here's an example: a few years after moving into your home, you get a larger than expected tax refund,a large inheritance, or a cash gift; , you could pay a portion of this money toward your loan principal, resulting in significant savings and a shortened payback period. For most loans, even this small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.