Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments which apply toward the loan principal. You can pay extra on principal in many different ways. For many people,Perhaps the easiest way to keep track is by making one additional mortgage payment every year. If you can't afford to pay an additional whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can pay a half payment every other week. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some borrowers just can't make extra payments. But remember that most mortgage contracts will allow additional payments at any time. You can take advantage of this provision to pay down your mortgage principal when you get some extra money. For example: five years after buying your home, you get a very large tax refund,a very large inheritance, or a non-taxable cash gift; , investing several thousand dollars into your mortgage principal can significantly shorten the period of your loan and save enormously on interest over the life of the loan. For most loans, even a small amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
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