There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make additional payments that apply toward your loan principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the simplest way to keep track is to make one additional mortgage payment per year. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. These options differ a little in lowering the total interest paid and reducing payback length, but each will significantly reduce the duration 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 permit you to make additional payments to your principal at any point during repayment. Any time you come into unexpected money, consider using this rule to pay a one-time additional payment on mortgage principal. For example: five years after moving into your home, you receive a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply a portion of this windfall toward your loan principal, which would result in significant savings and a shortened payback period. Unless the mortgage loan is quite large, even small amounts applied early can yield huge savings over the life of the loan.
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