There's a trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments which are applied to the principal. You can accomplish this using a few different techniques. Making 1 extra payment once a year is likely the easiest to keep track of. Of course, many people can't afford such an enormous additional payment, so dividing one extra payment into twelve extra monthly payments works too. Finally, you can pay a half payment every other week. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay more every month or even every year. But remember that most mortgages will allow you to make additional payments at any time. You can take advantage of this rule to pay extra on your principal when you come into extra money.
If, for example, you receive a very large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your mortgage principal can significantly shorten the period of your loan and save a huge amount on interest over the duration of the loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.
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