There's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments which apply toward the principal. You pay more on principal in various ways. For many people,Perhaps the simplest way to organize this process is by making one extra payment a year. But many people will not be able to afford such a large extra expense, so dividing an additional payment into twelve additional monthly payments works too. Another very popular option is to pay a half payment every other week. The result is you make one extra monthly payment in a year. Each of these options yields slightly different results, but each will significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Some folks just can't make any extra payments. But you should remember that most mortgages will allow you to make additional payments at any time. Any time you come into unexpected money, you can use this provision to pay an additional one-time payment toward mortgage principal. Here's an example: several years after buying your home, you receive a huge tax refund,a very large inheritance, or a cash gift; , investing a few thousand dollars into your home's principal will reduce the repayment period of your loan and save a huge amount on interest paid over the life of the mortgage loan. For most loans, even this modest amount, paid early enough in the loan period, could offer big savings in interest and duration 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.