Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make additional payments that go to the loan principal. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the simplest way to organize this process is to make 1 additional payment every year. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay a half payment every two weeks. The result is you will make one additional monthly payment in a year. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any time. Whenever you come into extra cash, consider using this provision to pay an additional one-time payment on principal.
Here's an example: several years after buying your home, you receive a very large tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal will significantly reduce the repayment duration of your loan and save a huge amount on interest paid over the duration of the loan. For most loans, even a relatively modest amount, paid early in the mortgage, could offer big savings in interest and in the duration of the loan.
Do you have a question regarding a mortgage program?