There's a trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments which apply to your principal. Borrowers make this happen in a few different ways. For many people,Perhaps the simplest way to organize this process is to make one extra mortgage payment per year. Of course, many folks can't pull off such a large additional expense, so dividing one extra payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every other week. Each option yields different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Remember that almost all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Any time you get some extra cash, you can use this rule to make a one-time additional payment toward your mortgage principal.
Here's an example: a few years after buying your home, you receive a larger than expected tax refund,a large legacy, or a cash gift; , you could pay this money toward your mortgage loan principal, which would result in significant savings and a shortened loan period. Unless the mortgage loan is very large, even small amounts applied early in the loan period can yield 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.