Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments which are applied to the loan principal. Borrowers can pay more on principal by employing various techniques. Paying a single additional full payment once a year is likely the simplest to track. If you can't afford to pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Another popular option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment each year. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some borrowers just can't make extra payments. But you should remember that most mortgages will allow you to make additional principal payments at any time. You can benefit from this provision to pay down your mortgage principal any time you get some extra money. Here's an example: five years after moving into your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal will significantly shorten the duration of your loan and save enormously on interest paid over the duration of the loan. For most loans, even this modest amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
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