There'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 which go to your principal. Borrowers can accomplish this in several ways. Making 1 additional payment one time per year is perhaps the easiest to arrange. If you can't afford to pay an additional whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every other week. Each option produces different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Keep in mind that most mortgage contracts will permit you to pay extra on your principal at any time. Whenever you get some unexpected money, you can use this rule to make an additional one-time payment toward principal. For example: five years after moving into your home, you receive a huge tax refund,a very large legacy, or a cash gift; , paying several thousand dollars into your home's principal will significantly shorten the repayment period of your loan and save a huge amount on interest over the life of the mortgage loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer big savings in interest and 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.