Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments which go to your loan principal. Borrowers can do this in several ways. For many people,Perhaps the simplest way to organize this process is by making one additional payment per year. However, some folks will not be able to afford such a large additional payment, so splitting an extra payment into twelve additional monthly payments is a great option too. Another option is to pay half of your payment every two weeks. The result is you make one extra monthly payment every year. Each option produces different results, but each will significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay extra every month or even every year. Keep in mind that most mortgage contracts will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this provision to pay extra on your mortgage principal when you get some extra money. Here's an example: several years after buying your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , you could pay this windfall toward your loan principal, resulting in enormous savings and a shortened payback period. Unless the loan is quite large, even modest 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.