There's a trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make additional payments that apply to the principal. Borrowers can accomplish this in several ways. Making one extra full payment once a year may be the easiest to track. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some borrowers just can't make extra payments. But remember that most mortgage contracts allow you to make additional principal payments at any time. Whenever you come into unexpected cash, you can use this provision to make a one-time additional payment toward your principal. If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your mortgage principal can reduce the period of your loan and save enormously on interest over the life of the mortgage loan. Unless the mortgage loan is quite large, even small amounts applied early can yield huge benefits over the duration of the loan.
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