Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments which are applied to your principal. You can do this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make 1 extra mortgage payment a year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
Some people can't manage any extra payments. Keep in mind that most mortgage contracts will allow you to pay extra on your principal at any point during repayment. You can take advantage of this rule to pay down your principal when you come into extra money.
If, for example, you receive a very large gift or tax refund four years into your mortgage, paying a few thousand dollars into your mortgage principal can shorten the duration of your loan and save enormously on mortgage interest over the life of the loan. Unless the loan is very large, even small amounts applied early in the loan period can yield huge savings over the life of the loan.
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