Here's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make additional payments that go toward the principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the easiest way to organize this process is to make one additional mortgage payment a year. But some people won't be able to swing this huge extra payment, so splitting a single additional payment into twelve additional monthly payments is a fine option too. Another popular option is to pay half of your payment every two weeks. The result is you will make one extra monthly payment every year. Each of these options produces slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers just can't make any extra payments. Remember that almost all mortgage contracts will permit you to pay extra on your principal at any time. You can benefit from this provision to pay extra on your principal when you get some extra money.
If, for example, you receive a large gift or tax refund five years into your mortgage, investing a few thousand dollars into your mortgage principal will reduce the repayment duration of your loan and save a huge amount on interest over the life of the mortgage loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
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