There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which are applied to your loan principal. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the simplest way to organize this process is to make one additional mortgage payment per year. If you can't afford to pay an additional 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. Each of these options yields slightly different results, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some people can't manage any extra payments. Keep in mind that most mortgages will allow you to make additional payments to your principal at any time. Whenever you come into unexpected cash, you can use this rule to make an additional one-time payment toward your mortgage principal. For example: five years after moving into your home, you receive a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , paying a few thousand dollars into your home's principal can significantly reduce the period of your loan and save enormously on interest over the life of the loan. Unless the loan is very large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.