There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make additional payments that go to your loan principal. Borrowers pay extra in a few different ways. Paying a single additional payment once every year may be the simplest to keep track of. However, many people won't be able to pull off such an enormous extra expense, so dividing an additional payment into 12 additional monthly payments is a fine option too. Another very popular option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment every 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 you will pay over the life of the loan.
Some folks just can't make any extra payments. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any point during repayment. Any time you get some unexpected cash, you can use this rule to pay an additional one-time payment on mortgage principal.
For example: five years after buying your home, you receive a huge tax refund,a very large legacy, or a cash gift; , paying a few thousand dollars into your mortgage principal will significantly reduce the repayment period of your loan and save enormously on interest over the life of the loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer big savings in interest and length of the loan.
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