Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments which go toward your loan principal. You pay extra on principal by employing various techniques. Paying 1 additional payment once every year may be the easiest to track. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay a half payment every two weeks. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly shorten the duration 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. But it's important to note that most mortgages will allow additional payments at any time. Whenever you get some unexpected money, you can use this provision to make an additional one-time payment toward your principal. Here's an example: several years after buying your home, you get a huge tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply a portion of this money toward your mortgage loan principal, which would result in significant savings and a shorter payback period. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
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