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 that go toward your principal. Borrowers make this happen in several different ways. Paying 1 extra full payment one time a year is likely the easiest to keep track of. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks can't manage extra payments. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. Any time you get some extra cash, consider using this provision to make an additional one-time payment toward mortgage principal.
If, for example, you receive a very large gift or tax refund four years into your mortgage, you could pay this money toward your mortgage loan principal, which would result in enormous savings and a shortened payback period. Unless the loan is quite large, even modest amounts applied early in the loan period can yield huge benefits over the life of the loan.
Do you have a question regarding a mortgage program?