There's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make extra payments that are applied toward the loan principal. Borrowers accomplish this goal in a few different ways. Paying 1 extra full payment once per year is perhaps the simplest to keep track of. 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 commit to paying a half payment every two weeks. These options differ slightly in lowering the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgages allow additional principal payments at any time. Any time you get some extra money, consider using this provision to make an additional one-time payment toward principal. For example: five years after buying your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could pay this windfall toward your mortgage loan principal, which would result in enormous savings and a shorter loan period. For most loans, even a relatively small amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.
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