Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments that are applied toward the principal. People pay extra in several ways. For many people,Perhaps the easiest way to keep track is by making 1 extra mortgage payment per year. 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. Another popular option is to pay a half payment every two weeks. The result is you will make one extra monthly payment in a year. Each option produces slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay more every month or even every year. But remember that most mortgages allow additional payments at any time. Whenever you come into extra money, consider using this provision to pay an additional one-time payment toward principal.
For example: five years after moving into your home, you receive a larger than expected tax refund,a very large inheritance, or a cash gift; , investing several thousand dollars into your home's principal can reduce the duration of your loan and save a huge amount on interest over the duration of the loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
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