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 additional payments which apply to the loan principal. Borrowers use different methods to meet this goal. For many people,Perhaps the simplest way to keep track is to make one extra mortgage payment per year. Of course, some folks can't swing this huge additional payment, so splitting an additional payment into 12 additional monthly payments is a fine option too. Another very popular option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment each year. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgage contracts allow additional principal payments at any time. Whenever you come into unexpected money, consider using this provision to pay an additional one-time payment on principal.
If, for example, you were to receive a very large gift or tax refund five years into your mortgage, you could apply a portion of this money toward your mortgage loan principal, resulting in significant savings and a shortened loan period. Unless the mortgage loan is very large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.
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