There'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 apply to the loan principal. Borrowers can accomplish this in several ways. For many people,Perhaps the easiest way to keep track is by making 1 extra mortgage payment a year. However, some folks will not be able to pull off such a large additional expense, so splitting one additional payment into twelve extra monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. These options differ slightly in lowering the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgages will allow additional principal payments at any time. Whenever you come into extra cash, you can use this rule to pay a one-time additional payment on your principal.
For example: a few years after buying your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , you could pay this money toward your mortgage loan principal, which would result in huge savings and a shortened payback period. Unless the loan is quite large, even modest amounts applied early can produce huge benefits over the life of the loan.
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