Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which go toward the principal. Borrowers pay more on principal by employing various techniques. Paying 1 additional full payment once every year may be the simplest to keep track of. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options yields different results, but they will all significantly shorten the length 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. Keep in mind that almost all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Whenever you come into unexpected money, consider using this provision to make an additional one-time payment toward your principal. For example: five years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal can significantly shorten the duration of your loan and save enormously on interest paid over the life of the loan. Unless the loan is quite large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
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