Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments which go toward your principal. You pay against principal by employing various techniques. Paying one additional full payment once per year may be the simplest to keep track of. If you can't afford to pay an extra whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. But you should remember that most mortgages allow you to make additional payments at any time. Whenever you come into unexpected cash, consider using this rule to make a one-time additional payment on your principal.
Here's an example: several years after moving into your home, you get a very large tax refund,a large legacy, or a cash gift; , investing a few thousand dollars into your home's principal will reduce the repayment duration of your loan and save enormously on interest over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge savings over the duration of the loan.
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