There's a trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make additional payments which apply toward the loan principal. People use different methods to accomplish this goal. Making a single extra payment one time every year may be the easiest to track. But many folks will not be able to afford such an enormous additional expense, so splitting one extra payment into twelve additional monthly payments works as well. Another popular option is to pay a half payment every other week. The effect here is that you make one additional monthly payment each year. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Some people can't manage any extra payments. Remember that most mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this rule to pay down your principal when you come into extra money.
Here's an example: a few years after moving into your home, you receive a huge tax refund,a large legacy, or a non-taxable cash gift; , you could apply a portion of this windfall toward your loan principal, resulting in enormous savings and a shortened payback period. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and in the duration of the loan.
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