Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments which are applied toward your principal. Borrowers can do this in various ways. For many people,Perhaps the easiest way to keep track is by making one extra mortgage payment every year. However, some people won't be able to pull off such an enormous additional expense, so splitting a single extra payment into twelve extra monthly payments works too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options produces different results, 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 more every month or even every year. Remember that virtually all mortgages will permit you to pay extra on your principal at any point during repayment. Any time you come into unexpected cash, consider using this rule to make a one-time additional payment on your mortgage principal.
If, for example, you receive an unexpected windfall three years into your mortgage, you could apply a portion of this windfall toward your loan principal, resulting in significant savings and a shortened loan period. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.
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