There's a trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments which are applied to your loan principal. You can accomplish this in several ways. Making 1 additional payment once every year is perhaps the easiest to track. Of course, many folks won't be able to afford such a large extra payment, so splitting an additional payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ a little in reducing the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers just can't make any extra payments. But you should remember that most mortgages allow additional payments at any time. You can benefit from this rule to pay extra on your mortgage principal any time you get some extra money. Here's an example: five years after buying your home, you receive a huge tax refund,a large legacy, or a cash gift; , you could pay this windfall toward your mortgage loan principal, resulting in huge savings and a shortened loan period. For most loans, even a modest amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
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