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 additional payments that are applied to the principal. Borrowers pay extra in several ways. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment every year. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. These options differ a little in reducing the total interest paid and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers just can't make any extra payments. Remember that most mortgages will permit you to make additional payments to your principal at any point during repayment. Whenever you get some extra money, you can use this provision to make an additional one-time payment toward your principal. If, for example, you receive a surprise windfall five years into your mortgage, investing a few thousand dollars into your home's principal can significantly shorten the period of your loan and save enormously on interest over the life of the mortgage loan. Unless the mortgage loan is very large, even small amounts applied early in the loan period can produce huge benefits over the duration of the loan.
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