Here's a simple trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments which go to the principal. Borrowers can pay extra on principal in various ways. Paying a single additional full payment once every year is likely the easiest to arrange. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay a half payment every two weeks. The result is you make one additional monthly payment each year. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Remember that virtually all mortgage contracts will permit you to pay extra on your principal at any time. Whenever you come into unexpected cash, consider using this rule to make a one-time additional payment toward mortgage principal.
Here's an example: five years after buying your home, you get a huge tax refund,a very large inheritance, or a non-taxable cash gift; , you could pay a portion of this windfall toward your loan principal, resulting in significant savings and a shorter loan period. Unless the loan is quite large, even modest amounts applied early in the loan period can produce huge savings over the duration of the loan.
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