There's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make additional payments which apply toward your principal. Borrowers can do this in various ways. Paying 1 additional payment one time per year is perhaps the easiest to keep track of. But some folks will not be able to swing such an enormous additional payment, so splitting one additional payment into 12 extra monthly payments is a great option too. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing 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 duration of the loan.
Some borrowers just can't make extra payments. Keep in mind that virtually all 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 any time you come into extra money. For example: a few years after moving into your home, you get a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this money toward your loan principal, resulting in enormous savings and a shorter payback period. Unless the loan is very large, even a few thousand dollars applied early can produce huge benefits over the life of the loan.
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