There's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments which go to the loan principal. Borrowers can pay more on principal in many different ways. Paying 1 additional full payment once a year is likely the simplest to arrange. However, some folks can't afford such a large additional payment, so splitting an additional payment into twelve extra monthly payments is a fine option too. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some borrowers just can't make any extra payments. Keep in mind that virtually all mortgage contracts will allow you to make additional payments to your principal at any time. Any time you come into unexpected cash, you can use this provision to pay a one-time additional payment toward mortgage principal. For example: a few years after buying your home, you receive a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal can shorten the duration of your loan and save enormously on interest paid over the life of the mortgage loan. Unless the mortgage loan is quite large, even modest amounts applied early can produce huge savings over the life of the loan.
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