Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments which apply toward your loan principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the easiest way to keep track is to make 1 additional payment every year. However, many folks will not be able to swing this huge extra payment, so dividing a single additional payment into 12 extra monthly payments works too. Finally, you can pay a half payment every other week. Each option produces slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay more every month or even every year. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. Whenever you come into extra cash, consider using this provision to make an additional one-time payment toward mortgage principal. If, for example, you receive a large gift or tax refund just a few years into your mortgage, you could apply a portion of this windfall toward your loan principal, resulting in huge savings and a shortened loan period. For most loans, even this modest amount, paid early in the loan period, could offer big savings in interest and in the duration of the loan.
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