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 additional payments that apply to the loan principal. Borrowers can do this using a few different techniques. Making a single extra payment once a year is likely the easiest to keep track of. If you can't pay an additional whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every other week. The effect here is that you will make one extra monthly payment every year. These options differ a little in reducing the total interest paid and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers just can't make extra payments. Remember that most mortgage contracts will allow you to make additional payments to your principal at any time. Any time you get some unexpected money, you can use this rule to make a one-time additional payment toward mortgage principal.
Here's an example: several years after moving into your home, you get a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could pay a portion of this money toward your loan principal, which would result in significant savings and a shorter payback period. For most loans, even a small amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.
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