Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that apply toward your principal. People employ various techniques to meet this goal. For many people,Perhaps the simplest way to keep track is by making one extra payment a year. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks just can't make any extra payments. But remember that most mortgages allow additional payments at any time. Whenever you get some unexpected cash, consider using this provision to make an additional one-time payment toward mortgage principal.
For example: several years after buying your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this money toward your mortgage loan principal, which would result in enormous savings and a shorter loan period. Unless the loan is quite large, even a few thousand dollars applied early can produce huge benefits over the life of the loan.
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